The Brooke Law Firm Blog

QVC Files for chapter 11 bankruptcy

Fri, 17 Apr 2026 18:02:22 GMT

QVC, the home shopping TV network that has been a staple for almost four decades, has filed for bankruptcy.The channel’s parent company, QVC Group, announced Thursday that it has voluntarily entered Chapter 11 proceedings in an effort to slash its debt from $6.6 billion to $1.3 billion.

Based in West Chester, Pennsylvania, the network sells everything from kitchen appliances to a Martha Stewart clothing collection. However, it has struggled in recent years from a surge in online shopping and live-streaming apps, like TikTok and Whatnot; as well as President Donald Trump’s tariffs and the decline of viewership on cable television.

CEO David Rawlinson said in a press release the “process will allow for QVC Group to have the financial structure it needs to accelerate our return to growth.”

The company has sufficient money to keep operating as it navigates the bankruptcy proceedings, and expects to complete the process within 90 days. No layoffs or furloughs are planned and vendors will be paid.

QVC, which stands for Quality, Value, Convenience, started in 1986, helping pioneer the live-shopping format. In 2017, QVC bought its older rival, Home Shopping Network (HSN), and merged the operations. Together, they operate nearly a dozen TV channels and a website.

“A stronger balance sheet, together with revenue growth from social and streaming, is expected to enable QVC Group to stabilize and return to sustainable growth over time,” the company said.

Shares of QVC Group ( QVCGA ) fell nearly 70% on Thursday.

Article originally attributed from CNN.com

Why Your Mortgage and Car Payments Are “Invisible” After Bankruptcy

Fri, 27 Feb 2026 23:58:42 GMT

Why Your Mortgage and Car Payments Are “Invisible” After Bankruptcy

You’ve received your discharge with your Chapter 7 bankruptcy. You’re making every car or mortgage payment on time each month, working hard to improve your credit after filing for bankruptcy. You’re waiting for your credit score to start climbing. Then you check your credit report and see… nothing.

No updates. No “Current” status. It’s like your car loan or mortgage doesn’t exist.

If your lawyer didn’t sign a Reaffirmation Agreement, and you didn’t represent yourself moving forward, you’ve likely entered the “Ghost Payment” zone. Here is what is actually happening with your unreported payments.

Key Takeaways for Unreported Mortgage & Car Payments:

The Reaffirmation Requirement: In many jurisdictions, if you don’t sign a Reaffirmation Agreement, the lender is not required to report your on-time payments to the credit bureaus.
Payment vs. Credit: Making payments “voluntarily” allows you to keep the house or car (the collateral), but it does nothing to rebuild your credit score unless that agreement was filed and approved by the court.
The Unreported Mortgage or Car Payment Fix: If you didn’t reaffirm the debt, your credit report will likely show “Discharged in Bankruptcy. You will need to take other steps to rebuild your credit.

When you don’t reaffirm a debt, that debt is technically “discharged.” Even if you keep the car and keep paying, the “Ride and Drive” method, most lenders will stop reporting those payments to the credit bureaus ( Equifax, Experian, and TransUnion ).

Why? Because they are terrified of being sued for violating the “discharge” under the Fair Debt Collection Practices Act. They worry that sending you a statement or reporting your payment could be seen as an illegal attempt to collect a debt you no longer legally owe.

Well, at least that’s what the creditors argue. In reality, that’s just creditors trying to silently force debtors into signing reaffirmation agreements.

Depending on your situation, signing or not signing a Reaffirmation Agreement has consequences, creating a frustrating Catch-22:

The Good News: If the Reaffirmation Agreement wasn’t signed, you aren’t liable for the debt if your situation changes. For example, if the car dies tomorrow or you can no longer afford the monthly payments, you can drop the keys at the dealership and walk away without owing a dime.

The Bad News: Without a signed Reaffirmation Agreement filed with the court, you are getting zero “credit” for those monthly payments. When you go buy your next car, the lender won’t see your history of reliability. The situation is made worse by a mortgage refinance, which shows years of no payments on your credit report.

Professor’s Note: While the mortgage lender could easily verify that your home is still in your possession, that you still reside there, and that the title never transferred, the reality is that without proof of payments and timely payments reflected in your credit report, the underwriting department will likely deny your loan.

Article credited from bankruptcyblog.com

Roomba maker iRobot files for bankruptcy

Fri, 19 Dec 2025 20:34:37 GMT

i Robot, the maker of the Roomba vacuum cleaner, filed for bankruptcy protection on Sunday, saying that it would go private after being bought by Picea Robotics, its primary manufacturer. The company, which raised concerns about staying in business in March, filed for Chapter 11 protection in Delaware bankruptcy court as it grapples with increased competition from lower-priced rivals and new U.S. tariffs.

iRobot generated about $682 million in total revenue in 2024, but its profits have been eroded by competition from Chinese rivals like Ecovacs Robotics. iRobot remains dominant in key markets like the U.S. and Japan, but competition forced it to lower its prices and make substantial investments in technological upgrades, according to bankruptcy court filings.

New U.S. tariffs have also harmed the company, especially a 46% levy on imports from Vietnam, where iRobot manufactures vacuum cleaners for the U.S. market. The tariffs raised the company’s costs by $23 million in 2025, while making it more difficult to plan for the future, according to iRobot’s court filings.

The company, which was the target of a thwarted $1.4 billion buyout by Amazon.com, has about $190 million in debt.

The debt stems from a 2023 loan that iRobot used to refinance its operations, while a European competition investigation stalled the Amazon deal.

After the Amazon deal fell apart and iRobot fell behind on payments to Picea, the China-based manufacturer acquired iRobot’s debt from a group of investment funds managed by the Carlyle Group, according to court documents.

Under iRobot’s bankruptcy plan, Picea will take 100% of the company’s equity and cancel the $190 million remaining on the 2023 loan, as well as an additional $74 million debt that iRobot owes to Picea under the companies’ manufacturing agreement.

Other creditors and suppliers will be paid in full, according to iRobot’s bankruptcy court filings.

iRobot said the bankruptcy is not expected to disrupt its app functionality, customer programs, global partners, supply chain relationships or product support.

The loss-making company was valued at $3.56 billion in 2021, driven by pandemic-fueled demand, but it is now worth around $140 million, according to data compiled by LSEG.

iRobot was founded in 1990 by three Massachusetts Institute of Technology roboticists. It initially focused on defense and space work before debuting the Roomba robotic vacuum in 2002.

The Roomba was an immediate success and it holds about 42% of the U.S. market share and 65% of the Japanese market share for robotic vacuum cleaners, according to the company.

iRobot is headquartered in Bedford, Massachusetts, and it has 274 employees, according to court documents.

Article credited from CNBC.com

Record number of subprime borrowers miss car loan payments in October, data shows

Wed, 19 Nov 2025 19:18:47 GMT

The share of subprime borrowers at least 60 days behind on their auto loans rose to 6.65% in October, the highest level on record, according to Fitch Ratings data going back to the early 1990s.

Subprime borrowing refers to lending to consumers with lower credit scores or limited credit histories, who are considered higher risk and typically charged higher interest rates to offset the increased likelihood of default.

PrimaLend, which serves the "buy-here-pay-here" auto financing market — where dealers sell and directly finance vehicles for customers with poor or limited credit — filed for bankruptcy protection last month.

Tricolor, which sold cars and provided auto loans mostly to low-income Hispanic communities in the Southwestern United States, also filed for bankruptcy in September.

A further deterioration in credit quality could weigh on lenders, especially at a time when investors are highly sensitive to signs of stress in loan portfolios .

High borrowing costs, rising living expenses and shrinking savings are squeezing household budgets, leaving subprime borrowers increasingly vulnerable.

Rising subprime auto delinquencies are emerging as a clear sign of mounting stress in the credit market , as many lower-income Americans struggle to keep up with payments.

Subprime auto loan delinquencies, where borrowers have gone at least 60 days without making a payment, rose to 6.65% in October, up from 6.50% in September and 6.23% a year earlier, according to Fitch Ratings data.

For prime borrowers, those with stronger credit histories, the rate held steady at 0.37%, unchanged from both the previous month and a year ago, indicating they remain largely shielded from the financial strain affecting lower-income consumers.

First Brands auto parts maker filed for bankruptcy protection

Fri, 17 Oct 2025 15:41:10 GMT

U.S. auto parts maker First Brands filed for bankruptcy protection on Monday after disclosing liabilities exceeding $10 billion, marking the collapse of a company whose rapidly deteriorating finances have shocked debt investors in recent weeks.

First Brands is expected to soon disclose an issue with its factoring arrangements amounting to nearly $2 billion, according to people familiar with the matter. The company's board and creditors are investigating the issue, one of these people said, confirming an earlier report in the Wall Street Journal. Factoring is a financing method that is tied to the future revenue of a company.

The company, whose fortunes unraveled in recent weeks as it grappled with a debt pile from a flurry of acquisitions over the past few years, has obtained $1.1 billion in debtor-in-possession financing from its first-lien lenders to support ongoing operations, it said in a statement.

Financial troubles at the auto parts supplier, coupled with the recent bankruptcy of subprime auto lender Tricolor Holdings, have rattled debt investors and stoked fears of broader stress in corporate debt markets, according to bankruptcy experts .

The high-profile collapse of First Brands has raised questions among investors about potential ripple effects across the automotive parts industry, although experts said automaker supply chains are not likely to be affected broadly since First Brands is primarily an aftermarket parts provider.

Ohio-based First Brands, which is owned by businessman Patrick James, said that its Chapter 11 cases pertain solely to U.S. operations, and expects its global operations to continue uninterrupted. In its Chapter 11 petition, First Brands estimated liabilities in the range of $10 billion to $50 billion, while its assets were estimated at between $1 billion and $10 billion.

Bankers and creditors had been racing to restructure First Brands' debt as investor confidence eroded leading up to the filing, with several of its associated companies also declaring bankruptcy.

Privately held First Brands, which makes replacement components including filters, brakes and lighting systems for the automotive aftermarket, emerged as a significant player in the industry through debt-financed acquisitions of rival auto parts makers.

Its well-known brands include Raybestos brake solutions, TRICO wiper blades, and FRAM filtration products. Last week, ratings agency Fitch downgraded First Brands' credit rating, saying the company's options for managing its debt were increasingly limited to off-market solutions. Asset manager Apollo Global Management and investment firm Diameter Capital Partners had amassed a short position against the company's debt earlier in September. Both firms have now closed their bets against First Brands' loans.

Article credit from Reuters.com

Sunnova solar panel company filed for bankruptcy

jpbrooke@gmail.com (John Brooke) — Fri, 18 Jul 2025 20:52:38 GMT

Sunnova Energy said on Sunday it had filed for Chapter 11 bankruptcy protection in the United States, as the residential solar panel installer buckled under the pressure of mounting debt and weakening demand. Shares were down 36.4% at 14 cents in premarket trading.

Sunnova filed for protection in the Bankruptcy Court for the Southern District of Texas after warning in March that it might not be able to continue as a going concern.

The company listed its estimated assets and liabilities in the range of $10 billion to $50 billion and has a total debt of $10.67 billion as of December 31, according to a court filing.

Sunnova said last week it would lay off about 55% of its workforce, or 718 employees, in a bid to cut spending.

Earlier this month, its unit, Sunnova TEP Developer, had also filed for Chapter 11 bankruptcy protection.

The company’s bankruptcy filing comes at a time when the U.S. residential solar energy industry is under immense pressure from higher interest rates; a reduction in incentives in the top market, California; and fears of subsidy rollbacks for clean energy.

President Donald Trump’s administration, which is pushing to maximize oil and gas production, canceled a partial loan guarantee of $2.92 billion last month that was awarded to Sunnova by the Biden administration.

Last year, peer SunPower, once a pioneer of the U.S. residential solar market, also collapsed following a subpoena from the U.S. Securities and Exchange Commission about its accounting practices and the departure of its CEO.

Companies that put solar panels on U.S. homes said last month a Republican budget bill that has advanced in Congress could deal a massive blow to the industry by eliminating a generous subsidy for homeowners that had buttressed the industry’s growth.

Del Monte, canned vegetable company, filed for bankruptcy

jpbrooke@gmail.com (John Brooke) — Fri, 18 Jul 2025 20:49:18 GMT

Del Monte Foods , the 139-year-old company best known for its canned fruits and vegetables, is filing for bankruptcy protection as U.S. consumers increasingly bypass its products for healthier or cheaper options.

Del Monte has secured $912.5 million in debtor-in-possession financing that will allow it to operate normally as the sale progresses.

“After a thorough evaluation of all available options, we determined a court-supervised sale process is the most effective way to accelerate our turnaround and create a stronger and enduring Del Monte Foods,” CEO Greg Longstreet said in a statement.

Del Monte Foods, based in Walnut Creek, California, also owns the Contadina tomato brand, College Inn and Kitchen Basics broth brands and the Joyba bubble tea brand.

The company has seen sales growth of Joyba and broth in fiscal 2024, but not enough to offset weaker sales of Del Monte’s signature canned products.

“Consumer preferences have shifted away from preservative-laden canned food in favor of healthier alternatives,” said Sarah Foss, global head of legal and restructuring at Debtwire, a financial consultancy.

Grocery inflation also caused consumers to seek out cheaper store brands. And President Donald Trump’s 50% tariff on imported steel, which went into effect in June, will also push up the prices Del Monte and others must pay for cans.

Del Monte Foods, which is owned by Singapore’s Del Monte Pacific, was also hit with a lawsuit last year by a group of lenders that objected to the company’s debt restructuring plan. The case was settled in May with a loan that increased Del Monte’s interest expenses by $4 million annually, according to a company statement.

Del Monte said late Thursday that the bankruptcy filing is part of a planned sale of company’s assets.

Forever 21 Files for Bankruptcy for the Second Time in Six Years

jpbrooke@gmail.com (John Brooke) — Fri, 20 Jun 2025 17:57:37 GMT

Once a formidable fast-fashion mall staple, Forever 21's parent company filed for bankruptcy protection late Sunday. It plans to "wind down" its U.S. operations unless it can find a buyer for the whole business or some of its parts.

The retailer has been a shell of its former self since it first filed for bankruptcy in 2019 . It survived then as a zombie brand with fewer stores, but the chain has struggled to find life beyond the mall and to compete against fast-growing online rivals, including Shein and Temu that ship ultra-cheap goods from China.

"We have been unable to find a sustainable path forward, given competition from foreign fast fashion companies ... as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends," Chief Financial Officer Brad Sell said in a statement .

Sell specifically called out a tax loophole used by Shein and Temu to ship clothes and accessories straight to U.S. shoppers. That enables them to avoid paying the import duties that Forever 21 and other retailers must pay when they ship goods in bulk to warehouses first. The U.S. government is now working to close the loophole .

After its 2019 bankruptcy, the chain was purchased by an unusual joint venture: Big mall operators Simon Property Group and Brookfield Property Partners teamed up with a firm called Authentic Brands Group, which buys and resuscitates dying brands such as Brooks Brothers or Nine West.

Authentic Brands' CEO later described his foray into once-fast-now-ultrafast fashion with Forever 21 as his " biggest mistake ."

In 2023, Forever 21's new owners tried another maneuver, signing a partnership with Shein . But losses continued, worsened by the high inflation that had shoppers tightening their clothing budgets. Court documents show Forever 21's liabilities are now ten times bigger than its assets.

The company says its stores and website will keep running while executives figure out the chain's future. Stores outside the U.S. are not part of the Chapter 11 filings.

23andMe Bankruptcy Filing Creates Privacy Concerns as DNA Is Up For Sale

Fri, 18 Apr 2025 18:43:07 GMT

With genetic testing company 23andMe filing for Chapter 11 bankruptcy protection and courting bidders, the DNA data of millions of users is up for sale.

A Silicon Valley stalwart since 2006, 23andMe has steadily amassed a database of people’s fundamental genetic information under the promise of helping them understand their disposition to diseases and potentially connecting with relatives.

But the company’s bankruptcy filing Sunday means information is set to be sold, causing massive worry among privacy experts and advocates.

“Folks have absolutely no say in where their data is going to go,” said Tazin Kahn, CEO of the nonprofit Cyber Collective, which advocates for privacy rights and cybersecurity for marginalized people.

“How can we be so sure that the downstream impact of whoever purchases this data will not be catastrophic?” she said.

A spokesperson for 23andMe said in an emailed statement that there will be no change to how the company stores customers’ data and that it plans to follow all relevant U.S. laws.

But Andrew Crawford, an attorney at the nonprofit Center for Democracy and Technology, said genetic data lawfully acquired and held by a tech company has almost no federal regulation to begin with.

Not only does the United States not have a meaningful general digital privacy law, he said, but Americans’ medical data faces less legal scrutiny if it’s held by a tech company rather than by a medical professional.

The Health Insurance Portability and Accountability Act (HIPAA), which regulates some ways in which health data can be shared and stored in the United States, largely applies only “when that data is held by your doctor, your insurance company, folks kind of associated with the provision of health care,” Crawford said.

“HIPAA protections don’t typically attach to entities that have IOT [internet of things] devices like fitness trackers and in many cases the genetic testing companies like 23andMe,” he said.

There is precedent for 23andMe’s losing control of users’ data.

In 2023, a hacker gained access to the data of what the company later admitted were around 6.9 million people, almost half of its user base at the time.

Article credited from NBC News

Hooters Restaurant Chain Filed for Chapter 11 Bankruptcy

Fri, 18 Apr 2025 18:37:10 GMT

Restaurant chain Hooters of America filed for bankruptcy in Texas on Monday, seeking to address its $376 million debt by selling all of its company-owned restaurants to a franchise group backed by the company’s founders.

Hooters, like other casual dining restaurants, has struggled in recent years due to inflation, the high costs of labor and food, and declining spending by cash-strapped American consumers. The company currently directly owns and operates 151 locations, with another 154 restaurants operated by franchisees, primarily in the United States.

The privately-owned company, which shares a private equity owner with recently-bankrupt TGI Fridays, intends to sell all corporate-owned locations to a buyer group comprised of two existing Hooters franchisees, who operate 30 high-performing Hooters locations in the U.S., mainly in Florida and Illinois.

Hooters did not disclose the purchase price of the transaction, which must be approved by a U.S. bankruptcy judge before it becomes final.

Founded in 1983, Hooters became famous for its chicken wings and its servers’ uniform of orange shorts and low-cut tank tops.

The buyer group is backed by some of Hooters’ original founders, and it pledged to take Hooters “back to its roots.”

“With over 30 years of hands-on experience across the Hooters ecosystem, we have a profound understanding of our customers and what it takes to not only meet, but consistently exceed their expectations,” said Neil Kiefer, a member of the buyer group and the current CEO of the original Hooters’ location in Clearwater, Florida.

Hooters said it expects to complete the deal and emerge from bankruptcy in three to four months. The company has lined up about $35 million in financing from its existing lender group to complete the bankruptcy transaction.

Casual dining restaurants have been hammered by rising costs in 2024, with well-known chains like TGI Fridays, Red Lobster, Bucca di Beppo, and Rubio’s Coastal Grill all filing for bankruptcy last year.

Restaurant prices have risen about 30% in the last 5 years, outpacing consumer prices overall, according to the Federal Reserve Bank of St. Louis.

Article credited from Reuters.com

Joann Fabrics will close 500 stores after second bankruptcy filing

Fri, 14 Feb 2025 18:16:34 GMT

Struggling fabric and crafts seller Joann plans to close about 500 of its stores across the U.S. — or more than half of its current nationwide footprint.

The move, announced Wednesday, arrives amid a tumultuous time for Joann. Last month, the Hudson, Ohio-based retailer f iled for Chapter 11 bankruptcy protection for the second time within a year, with the company pointing to issues like sluggish consumer demand and inventory shortages.

Joann previously sought Chapter 11 in March 2024 and later emerged as a private company. But after operational challenges continued to pile up, Joann filed for bankruptcy again in January. It’s now looking to sell the business — and maintained in a filing Wednesday that closing “underperforming” locations is necessary to complete that process.

“This was a very difficult decision to make, given the major impact we know it will have on our Team Members, our customers and all of the communities we serve,” the company said in a statement sent to The Associated Press. “(But) right-sizing our store footprint is a critical part of our efforts to ensure the best path forward.”

Joann currently operates around 800 stores across 49 states. The initial list of the roughly 500 locations it’s looking to close can be found on the company’s restructuring website — spanning states including Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, New York, Pennsylvania, Texas and more.

When exactly those closures will take place and how many employees will be impacted has yet to be seen. Joann’s Wednesday motion seeks court permission to begin the process.

Joann’s roots date back to 1943, with a single storefront in Cleveland, Ohio. And the retailer later grew into a national chain. Formerly known as Jo-Ann Fabric and Craft Stores, the company rebranded itself with the shortened “Joann” name for its 75th anniversary.

Both of Joann’s bankruptcy filings seen over the last year arrived amid some slowdowns in discretionary spending — notably with consumers taking a step back from at-home crafts, at least relative to the early COVID-19 pandemic boom. Joann has also faced rising competition in the crafts space from rivals like Hobby Lobby, as well as from larger retailers, like Target, who now offer ample art supplies and kits.

And, while Joann turned to implementing a new business plan after emerging from bankruptcy last spring, “unanticipated inventory challenges post-emergence, coupled with the prolonged impact of an excessively sluggish retail economy, put (Joann) back into an untenable debt position,” interim CEO Michael Prendergast noted in a sworn court declaration filed when Joann initiated its latest Chapter 11 proceedings on Jan. 15.

Prendergast explained that inventory shortages had significant ripple effects on Joann’s core business, particularly when “in-stock levels eventually dropped by upwards of 10%" and led to a “new phase of operational distress.”

Citing these and other macroeconomic challenges seen in the retail space over recent years, Joann has maintained that a sale of the business is the best path forward. The company says it has a proposed “stalking horse” bid agreement with Gordon Brothers Retail Partners.

Article credited online at Reuters.com

Spirit Airlines Filed for Chapter 11 Bankruptcy

Fri, 17 Jan 2025 19:08:00 GMT

Carrier expects to operate as normal through the process

Spirit Airlines has filed for bankruptcy protection, the no-frills U.S. travel pioneer said on Monday, after struggling with years of losses, failed merger attempts and heavy debt levels.

It is the first major U.S. airline to file for Chapter 11 in more than a decade, after a proposed $3.8 billion merger with JetBlue Airways collapsed in January.

The Florida-based airline said it had pre-arranged a deal with its bondholders to restructure its debts and raise money to help it operate during the bankruptcy process, which it expects to exit in the first quarter of 2025.

Intense competition among U.S. carriers for price-sensitive leisure travelers as well as an oversupply of airline seats in the domestic market hit Spirit's pricing power. Its average fare per passenger was down 19% on a year-on-year basis in the first half of this year from a year earlier.

The carrier said it expected to continue operating its business as normal through the proceedings and customers could book and fly without interruption.

The Chapter 11 process will not impact wages or benefits of its employees, it said. Its vendors and aircraft lessors will also continue to be paid and will not be impaired, it added.

The company said it expected to be delisted from the New York Stock Exchange in the near term, and that its shares would be canceled and have no value as part of the restructuring. Spirit's shares, which have plunged more than 90% this year, were halted on Monday. Shares of rival low-cost carriers Frontier Airlines and JetBlue fell 14% and 6%, respectively.

Spirit, known for its bright yellow livery, is the first major U.S. airline to file for Chapter 11 since 2011.

It has been among the airlines most heavily affected by issues with RTX's Pratt & Whitney Geared Turbofan engines, which have forced it to ground multiple aircraft and driven up costs. Spirit has not posted a full-year profit since 2019. It lost about $360 million in the first half of this year despite strong travel demand.

Analysts say a merger with JetBlue would have thrown a lifeline to the company. However, a Boston judge blocked the deal on the grounds it would reduce competition, raising doubts about the company's ability to manage looming debt maturities. Spirit has been shrinking its operations as part of its efforts to cut costs and shore up its finances. It has furloughed hundreds of pilots and delayed aircraft deliveries. It is also selling its planes to boost liquidity.

The discount carrier became popular with budget-conscious customers willing to forgo amenities like checked bags and seat assignments. Ultra-low-cost carriers, which excelled at keeping their expenses low and offering affordable, no-frills travel, have struggled since the COVID pandemic as some travelers prefer to pay extra for a more comfortable journey as they pursue experiences.

Article credited from Reuters.com

Party City is Going Out of Business

Fri, 20 Dec 2024 20:34:23 GMT

Party City is closing down all of its stores, ending nearly 40 years in business.

CEO Barry Litwin told corporate employees Friday in a meeting that Party City is "winding down" operations immediately and that today will be their last day of employment.

"That is without question the most difficult message that I've ever had to deliver," Litwin said at the meeting, which was held on a video conference call. Party City's "very best efforts have not been enough to overcome" its financial challenges, he added, resulting in the company's collapse.

"It's really important for you to know that we've done everything possible that we could to try to avoid this outcome," Litwin said. "Unfortunately, it's necessary to commence a winddown process immediately."

The chain is the largest party supply store in the United States and recently exited bankruptcy in September 2023. That plan included the canceling of nearly $1 billion in debt, the dissolution of its stock and a majority of its 800 US stores staying open.

Though in the short term Party City managed to avoid the same fate as Bed Bath & Beyond and 99 Cents Only Stores, it still had more than $800 million in debt to overcome, which strained earnings this year.

The company had closed more than 80 stores from the end of 2022 to August 2024, according to its most recent financial documents.

Party City said in a previous statement that it had renegotiated many of its leases and exited "less productive locations," which resulted in many of chain's workers remaining employed. The company had approximately 6,400 full-time and 10,100 part-time workers as of 2021.

Party City filed for bankruptcy in January 2023 after struggling to pay off its $1.7 billion debt load. As a result, it was also delisted from the New York Stock Exchange.

Net sales for Party City decreased to $407 million for the three months ending in September 2023, compared to $502 million in the same period in 2022, according to the company's latest financial disclosures.

The company, which sells balloons, Halloween costumes and other party goods, has stumbled in the face of growing competition from e-commerce sites and pop-up concepts like Spirit Halloween. Competition from big-box retailers like Amazon, Walmart, Costco and others also crushed smaller chains.

It also had to contend with rising costs during the pandemic and a helium shortage, which hurt its crucial balloon business.

The chain joins a growing list of retailer bankruptcies this year as customers cut back on discretionary spending amid the rising cost of living. Notably, Big Lots announced Thursday it was starting "going out of business" sales at all of its locations after a plan for a private equity firm to rescue the bankruptcy retailer failed.

Story credited by CNN.

Satire Publication the Onion Buys Alex Jones' Infowars at Auction

Fri, 15 Nov 2024 20:48:38 GMT

A federal bankruptcy judge in Texas has ordered a hearing into how the satirical news publication The Onion won the bidding for conspiracy theorist Alex Jones’ Infowars, after Jones and his lawyers raised questions about how a bankruptcy auction was conducted.

The satirical news publication The Onion was named the winning bidder for Alex Jones' Infowars at a bankruptcy auction Thursday, backed by families of Sandy Hook Elementary School shooting victims whom Jones owes more than $1 billion in defamation judgments for calling the massacre a hoax.

The purchase would turn over Jones’ company, which for decades has peddled in conspiracy and misinformation, to a humor website that plans to relaunch the Infowars platform in January as a parody. But the judge in Jones’ bankruptcy case said Thursday that he had concerns about how the auction was conducted and ordered a hearing for next week after complaints by lawyers for Jones and a company affiliated with Jones that put in a $3.5 million bid.

Within hours of the announcement about The Onion's winning bid, Infowars’ website was down and Jones was broadcasting from what he said was a new studio location. Up for sale were Infowars’ website; social media accounts; studio in Austin, Texas; trademarks; video archive; and other assets.

“The dissolution of Alex Jones’ assets and the death of Infowars is the justice we have long awaited and fought for,” Robbie Parker, whose daughter Emilie was killed in the 2012 shooting in Connecticut, said in a statement provided by his lawyers.

The satirical outlet — which carries the banner of “America’s Finest News Source” on its masthead — was founded in the 1980s and for decades has skewered politics and pop culture, including making Jones a frequent target of mocking articles. Mass shootings in the U.S., such as the Sandy Hook attack, are often followed by The Onion publishing slightly updated versions of one of its most well-known recurring pieces: "'No Way to Prevent This,' Says Only Nation Where This Regularly Happens.”

On his live broadcast, Jones was angry and defiant, calling the sale “a total attack on free speech.” He later announced his show was being shut down. Jones then resumed his broadcast from a new studio nearby and carried it live on his accounts on X.

At a court hearing Thursday afternoon in Houston, the trustee who oversaw the auction, Christopher Murray, acknowledged that The Onion did not have the highest bid but said it was a better deal overall because some of the Sandy Hook families agreed to forgo a portion of the sale proceeds to pay Jones' other creditors. First United American Companies, a business affiliated with one of Jones’ product-selling websites, submitted the only other bid. The trustee said he could not put a dollar amount on The Onion’s bid.

Walter Cicack, an attorney for First United American Companies, told U.S. Bankruptcy Judge Christopher Lopez that Murray changed the auction process only days before, deciding not to hold a round Wednesday where parties could outbid each other. Sealed bids were submitted last week, and the trustee chose only from those, Cicack said.

Murray said he followed the judge's auction rules laid out in a September order that made the overbidding round optional. But Lopez said he was surprised such a round of bidding was not held and that he had concerns about transparency.

After the hearing, Jones said on his show that he thought the auction was unfairly rigged and expressed optimism that the judge would nullify the sale. He has repeatedly told his listeners that if his supporters won the bidding, he could stay on the Infowars platforms but that he had set up a new studio, websites and social media accounts in case they were needed.

“This was a auction that didn’t happen, with a bid that was lower, with money that wasn’t real," he said.

Ben Collins, CEO of The Onion’s parent company, Global Tetrahedron, told The Associated Press in a video interview earlier Thursday that it planned to relaunch the Infowars website in January with satire aimed at conspiracy theorists and right-wing personalities, as well as educational information about gun violence prevention from the group Everytown for Gun Safety. Collins would not disclose the bid amount.

“We thought it would be a very funny joke if we bought this thing, probably one of the better jokes we’ve ever told,” Collins said. “The (Sandy Hook) families decided they would effectively join our bid, back our bid, to try to get us over the finish line. Because by the end of the day, it was us or Alex Jones, who could either continue this website unabated, basically unpunished, for what he’s done to these families over the years, or we could make a dumb, stupid website, and we decided to do the second thing.”

Jones did not lose his personal X account, which has more than 3 million followers, in the auction. But the bankruptcy judge is deciding whether his personal accounts can be sold off at the trustee’s request.

Sandy Hook families sued Jones and his company for repeatedly saying on his show that the shooting that killed 20 children and six educators in Newtown, Connecticut, was a hoax staged by crisis actors to spur more gun control. Parents and children of many of the victims testified that they were traumatized by Jones’ conspiracies and threats by his followers . Jones has since acknowledged the shooting was “100% real.”

The Onion, based in Chicago, bills itself as “the world’s leading news publication, offering highly acclaimed, universally revered coverage of breaking national, international, and local news events.” Recent headlines have included, “Trump Boys Have Slap Fight Over Who Gets To Run Foreign Policy Meetings,” “Oklahoma Law Requires Ten Commandments To Be Displayed In Every Womb” and “Man Forgetting Difference Between Meteoroid, Meteorite Struggles To Describe What Just Killed His Dog.”

Story credit from Reuters.com

Red Lobster Exists Bankruptcy with New Owner

Fri, 20 Sep 2024 20:50:58 GMT

Red Lobster announced its exit from Chapter 11 bankruptcy on 16 September after gaining the newly created RL Investor Holdings as its new owner and officially appointing Damola Adamolekun as CEO.

RL Investor Holdings is an entity created by funds managed by affiliates of Fortress Investment Group, alongside co-investors TCW Private Credit and Blue Torch. With the company taking over as the chain’s new owner, Red Lobster has exited its bankruptcy status.

“As part of our new ownership structure, we have backers who have a history of making successful investments in restaurants. Our comprehensive and long-term investment plan for Red Lobster includes a commitment of more than USD 60 million [EUR 54 million] in new funding, which will help us to deliver improvements across every aspect of our company,” Adamolekun said. “I’m looking forward to working with our 30,000-strong team to bring our plan to life.”

Post-bankruptcy, Adamolekun said Red Lobster is a stronger, more resilient company. Shedding the bankruptcy label has allowed the chain to “start a new chapter in our history," Adamolekun said.

Though Red Lobster’s bankruptcy status has been left behind, its debts have not.

Samut Sakhon, Thailand-based seafood company Thai Union is one of several companies claiming the Orlando, Florida, U.S.A.-based restaurant chain owes it money.

Thai Union, which once owned a significant share of Red Lobster, claims the chain owes the group around $3.7 million due to sudden changes in demand forecasts for shrimp.

Thai Union said it built up an excess inventory of shrimp in late 2023 that was custom-produced for Red Lobster – worth around $22.9 million. Red Lobster worked with Thai Union to lessen that inventory, but Thai Union is still seeking $3.7 million in related costs due to fluctuations in anticipated demand.

Red Lobster is now an independent, privately-held company with 545 restaurant locations in 44 states and four Canadian provinces.

Tupperware Files for Bankruptcy

Fri, 20 Sep 2024 20:44:27 GMT

Tupperware, known the world over for its plastic food storage containers, has filed for bankruptcy after years of falling popularity and financial troubles.

“Over the last several years, the company’s financial position has been severely impacted by the challenging macroeconomic environment,” Laurie Ann Goldman, president and CEO of Tupperware Brands Corporation, said in a statement late Tuesday.

Chapter 11 bankruptcy allows companies to solve their financial problems by restructuring. “This process is meant to provide us with essential flexibility as we pursue strategic alternatives to support our transformation into a digital-first, technology-led company,” Goldman added.

Tupperware has historically sold to consumers only through so-called direct sales, most commonly at “Tupperware parties,” similar to cosmetic company Avon’s business model, and only began selling in Target in 2022.

“The party is over for Tupperware,” Susannah Streeter, head of money and markets at UK investment platform Hargreaves Lansdown, said in a note. “There is still a chance a buyer for the business can be found but, with plastic seen as far from fantastic among eco-aware consumers, revitalizing the brand will be an uphill struggle.”

Even though the brand was once a household name, it became less popular with younger consumers, in contrast with some of its competitors.

Tupperware rang the alarm bells in April 2023 when it disclosed in a regulatory filing that it could go out of business. The Florida-based company said at the time that, if it didn’t find more cash, it would no longer be able to fund its operations.

Tupperware found that lifeline four months later, when it reached a deal with its creditors to reduce its interest payment obligations by $150 million. It also secured $21 million in new financing, an extension on the deadline for paying back about $348 million in debt and a reduction in the amount of debt it owed by around $55 million.

But the company’s finances still declined following the deal.

The company said Tuesday that it would seek the approval of the bankruptcy court to continue operating during Chapter 11 proceedings.

Many businesses file for bankruptcy protection to wind down some operations, shed debt and cut costs. Chapter 11 bankruptcy is a common route.

Tupperware shares have plummeted 74.5% this year and last traded at just 51 cents.

Article credited from CNN.com

Blink Fitness Files for Bankruptcy

Fri, 16 Aug 2024 19:56:32 GMT

Blink Fitness, an Equinox-owned chain of about 100 low-cost gyms, filed for bankruptcy on Monday in Delaware seeking to find a buyer for its business.

Blink has about $280 million in debt, and it blamed its bankruptcy on the lingering effects from the COVID-19 pandemic, which forced it to shut its operations for nine months and incur additional debt and deferred rent obligations, according to court filings.

Blink markets itself as an "all-inclusive and inviting" place for everybody to get fit, with membership prices between $15 and $45 per month. More than 65% of the company's 443,000 members are younger than 35 years old, according to court filings.

Blink aims to quickly sell its business in bankruptcy, potentially closing underperforming locations in the process, according to its court filings.

Blink began marketing its business in July 2024, and it has already received substantial interest from potential buyers, Blink chief restructuring officer Steven Shenker wrote in a Monday court filing.

Despite its high debt, Blink has reinvested in 30 of its most popular locations in the first half of 2024, buying new gym equipment, updating its club interiors, and partnering with wellness brands to offer supplemental fitness recovery options. Those efforts have resulted in higher user satisfaction and an increase in revenue, according to Blink.

"Over the last several months, we have been focused on strengthening Blink's financial foundation and positioning the business for long-term success," Blink CEO Guy Harkless said in a statement.

Blink has lined up $21 million in additional financing from its lenders to continue operations and fund its bankruptcy case.

Founded in 2011, the New York-based company has 92 owned locations and 10 franchised locations in New York, New Jersey, Massachusetts, Texas, Illinois, and California. Blink has about 2,000 employees.

Judge Ends Rudy Giuliani Bankruptcy Case, Says He Flouted the Process With His Lack of Transparency

Fri, 19 Jul 2024 18:50:00 GMT

A judge has thrown out Rudy Giuliani’s bankruptcy case, finding that the former New York City mayor had flouted the process with his lack of transparency

NEW YORK (AP) — A judge threw out Rudy Giuliani ’s bankruptcy case on Friday, slamming the former New York City mayor as a “recalcitrant debtor” who thumbed his nose at the process while seeking to shield himself from a $148 million defamation judgment and other debts.

U.S. Bankruptcy Judge Sean Lane criticized Giuliani for repeated “uncooperative conduct,” self-dealing, and a lack of transparency. The judge cited failures to comply with court orders, failure to disclose sources of income, and his apparent unwillingness to hire an accountant to go over his books.

“Such a failure is a clear red flag,” Lane wrote.

Dismissing the case ends his pursuit of bankruptcy protection, but it doesn’t absolve him of his debts. His creditors can now pursue other legal remedies to recoup at least some of the money they’re owed, such as getting a court order to seize his apartments and other assets.

Giuliani is now free to also pursue an appeal of the defamation verdict, which arose from his efforts to overturn Republican Donald Trump’s 2020 presidential election loss.

Lane indicated at a hearing Wednesday that he would probably dismiss the case. Giuliani's lawyer had floated other options to keep the case alive, but agreed ultimately that dismissing it was the best way forward. The dismissal includes a 12-month ban on Giuliani filing again for bankruptcy protection.

“Transparency into Mr. Giuliani’s finances has proven to be an elusive goal,” Lane wrote, and he “sees no evidence that this will change.”

Among his concerns, the judge said, were that Giuliani funneled his income — including at least $15,000 a month from his now-canceled talk radio show — into companies he owned; never reported any income from those entities; failed to disclose that he had started promoting his own “Rudy Coffee” brand; and was late to disclose a contract he has to write a book.

Giuliani's spokesperson Ted Goodman — drawing a parallel to what he deemed the “grossly unfair” defamation case — said Friday that the bankruptcy matter had been “burdened with many of the same voluminous and overly broad discovery requests and other actions.” Among them, he claimed, were leaks “intended to harm the mayor and destroy his businesses.”

Goodman ascribed political motives to Giuliani's legal troubles, stating without evidence that they were meant to punish him for investigating President Joe Biden's son, Hunter, and “to deter anyone else from asking questions or getting to the truth.” Nevertheless, he said, they're confident "our system of justice with be restored and the mayor will be totally vindicated.”

Giuliani, a longtime Trump ally, filed for bankruptcy last December just days after the eye-popping damages award to former Georgia election workers Ruby Freeman and Wandrea “Shaye” Moss. The bankruptcy filing froze collection of the debt.

A lawyer for Freeman and Moss accused Giuliani at Wednesday's hearing of using bankruptcy as a “bad-faith litigation tactic” and a “pause button on his woes,” and urged Lane to dismiss it so they could pursue the damages they were awarded.

“Ruby Freeman and Shaye Moss have already waited too long for justice,” the women's lawyer, Rachel Strickland, said Friday. “We are pleased the court saw through Mr. Giuliani’s games and put a stop to his abuse of the bankruptcy process. We will begin enforcing our judgment against him ASAP.”

The other people and entities to whom Giuliani owes money wanted to keep the bankruptcy case going with a court-appointed trustee taking control of Giuliani’s assets.

Earlier this month, Giuliani requested the case be converted to a Chapter 7 liquidation — in which an appointed trustee would sell off assets to help pay creditors.

Giuliani's lawyer reconsidered that idea at Wednesday's hearing and pushed to dismiss the case instead, noting that administrative fees related to liquidation would “consume if not 100%, a substantial portion of the assets.”

Freeman and Moss can now bring their effort to collect on the award back to the court in Washington, D.C., where they won their lawsuit. The women said Giuliani’s targeting of them after Trump narrowly lost Georgia to Biden led to death threats that made them fear for their lives.

The bankruptcy is one of a host of legal woes consuming the 80-year-old Giuliani, the ex-federal prosecutor and 2008 Republican presidential candidate who was once heralded as “America’s Mayor” for his calm and steady leadership after the Sept. 11, 2001, terrorist attacks.

Last week, he was disbarred as an attorney in New York after a court found he repeatedly made false statements about Trump’s 2020 election loss. He is also facing the possibility of losing his law license in Washington after a board in May recommended that he be disbarred.

In Georgia and Arizona, Giuliani is facing criminal charges over his role in the effort to overturn the 2020 election. He has pleaded not guilty in both cases.

When he filed for bankruptcy, Giuliani listed nearly $153 million in existing or potential debts, including almost $1 million in state and federal tax liabilities, money he owes lawyers, and many millions of dollars in potential judgments in lawsuits against him. He estimated he had assets worth $1 million to $10 million.

In his most recent financial filings in the bankruptcy case, he said he had about $94,000 cash in hand at the end of May while his company, Giuliani Communications, had about $237,000 in the bank. A main source of income for Giuliani over the past two years has been a retirement account with a balance of just over $1 million in May, down from nearly $2.5 million in 2022 after his withdrawals, the filings say.

In May, he spent nearly $33,000 including nearly $28,000 for condo and co-op costs for his Florida and New York City homes. He also spent about $850 on food, $390 on cleaning services, $230 on medicine, $200 on laundry and $190 on vehicles.

US Supreme Court blocks Purdue Pharma bankruptcy settlement

Fri, 28 Jun 2024 18:58:34 GMT

The U.S. Supreme Court on Thursday blocked OxyContin maker Purdue Pharma's bankruptcy settlement that would have shielded its wealthy Sackler family owners from lawsuits over their role in the nation's deadly opioid epidemic.

The 5-4 decision reversed a lower court's ruling that had upheld the plan to give Purdue's owners immunity in exchange for paying up to $6 billion to settle thousands of lawsuits accusing the company of unlawful misleading marketing of OxyContin, a powerful pain medication introduced in 1996.

The ruling represented a victory for President Joe Biden's administration, which had challenged the settlement as an abuse of bankruptcy protections meant for debtors in financial distress, not people like the Sacklers who have not filed for bankruptcy.

Conservative Justice Neil Gorsuch wrote the ruling, which was joined by fellow conservative Justices Clarence Thomas, Samuel Alito and Amy Coney Barrett, as well as liberal Justice Ketanji Brown Jackson.

"The Sacklers have not filed for bankruptcy and have not placed virtually all their assets on the table for distribution to creditors, yet they seek what essentially amounts to a discharge. They hope to win a judicial order releasing pending claims against them brought by opioid victims. They seek an injunction 'permanently and forever' foreclosing similar suits in the future," Gorsuch wrote. "And they seek all this without the consent of those affected."

Purdue filed for Chapter 11 bankruptcy in 2019 to address its debts, nearly all of which stemmed from thousands of lawsuits alleging that OxyContin helped kickstart an opioid epidemic that has caused more than half a million U.S. overdose deaths over two decades.

At issue in the case was whether U.S. bankruptcy law lets Purdue's restructuring include legal protections for the members of the Sackler family, who have not filed for personal bankruptcy. These so-called "non-debtor releases" originally arose in the context of asbestos litigation, but their use has been expanded by companies looking to use such protections as a bargaining chip.

The Stamford, Connecticut-based company estimates that its bankruptcy settlement, approved by a U.S. bankruptcy judge in 2021, would provide $10 billion in value to its creditors, including state and local governments, individual victims of addiction, hospitals and others who have sued the company.

The Biden administration and eight states challenged the settlement. All the states dropped their opposition after the Sacklers agreed to contribute more to the settlement fund, but the U.S. Trustee - the Justice Department's bankruptcy watchdog - and some individual opioid plaintiffs maintained their opposition.

Purdue issued a statement expressing disappointment in the court's decision. "Today's ruling is heart-crushing because it invalidates a settlement supported by nearly all of our creditors - including states, local governments, personal injury victims, schools and hospitals - that would have delivered billions of dollars for victim compensation, opioid crisis abatement, and overdose rescue and addiction treatment medicines," it said.

Justice Brett Kavanaugh wrote a dissenting opinion that was joined be fellow conservative Chief Justice John Roberts, and liberal Justices Sonia Sotomayor and Elena Kagan. "Today's decision is wrong on the law and devastating for more than 100,000 opioid victims and their families," Kavanaugh wrote.

Several state attorneys general issued statements praising the ruling, with some saying that it would bring Purdue back to the negotiating table.

"Purdue and the Sacklers must pay so we can save lives and help people live free of addiction," said Josh Stein, attorney general of North Carolina. "If they won't pay up, I'll see them in court."

Purdue, in its statement, said the company "will immediately reach back out to the same creditors who have already proven they can unite to forge a settlement in the public interest."

In a statement, members of the Sackler family said they "remain hopeful about reaching a resolution that provides substantial resources to help combat a complex public health crisis."

A group comprising more than 60,000 people who have filed personal injury claims stemming from their exposure to Purdue opioid products had told the Supreme Court they support the settlement, including legal immunity for members of the Sackler family.

In upholding the settlement in May 2023, the Manhattan-based 2nd U.S. Circuit of Appeals concluded that federal bankruptcy law permits legal protections for non-bankrupt parties like the Sacklers in extraordinary circumstances. It ruled that the legal claims against Purdue were inextricably linked to claims against its owners, and that allowing lawsuits to continue targeting the Sacklers would undermine Purdue's efforts to reach a bankruptcy settlement.

The Supreme Court in August 2023 paused bankruptcy proceedings concerning Purdue and its affiliates when it agreed to take up the administration's appeal of the 2nd Circuit's ruling.

Lawsuits against Purdue and Sackler family members accused them of fueling the opioid epidemic through deceptive marketing of its pain medication. The company pleaded guilty to misbranding and fraud charges related to its marketing of OxyContin in 2007 and 2020.

Members of the Sackler family have denied wrongdoing but expressed regret that OxyContin "unexpectedly became part of an opioid crisis."

Article credited from Reuters.com

Long Island diocese to end bankruptcy without sex abuse deal

Thu, 25 Apr 2024 18:06:55 GMT

The Roman Catholic Diocese of Rockville Centre, New York, which serves about 1.2 million Catholics in Nassau and Suffolk counties, said on Friday that its bankruptcy had "run its course" after abuse survivors "overwhelmingly" voted against the diocese's offer.

The Roman Catholic Diocese of Rockville Centre, New York has asked a judge to end its Chapter 11 bankruptcy, after failing to get support from about 530 sex abuse survivors on a proposed $200 million settlement of their claims against the diocese.

"The Diocese sincerely hoped that its offer of $200 million—in addition to very substantial insurance assets—would be accepted by the creditors," the diocese wrote in a motion to dismiss filed in U.S. bankruptcy court in Manhattan.

James Stang, an attorney representing abuse survivors in the bankruptcy, said that the diocese's failure to reach a deal was "unprecedented."

In other Catholic bankruptcies, abuse survivors were allowed to propose their own bankruptcy settlement instead of being offered a binary choice between the diocese's plan or nothing, Stang said.

The diocese filed for Chapter 11 bankruptcy in New York in October 2020, citing the cost of lawsuits filed by childhood victims of clergy sexual abuse. New York's Child Victims Act, which took effect in August 2020, temporarily enabled victims of child sexual abuse to file lawsuits over decades-old crimes.

U.S. Bankruptcy Judge Martin Glenn is scheduled to hear the diocese's request to dismiss its case on May 9.

Glenn warned last year that he would dismiss the case if settlement talks continued to stagnate, but he said he was not eager to be the first judge to kick a Catholic diocese out of bankruptcy.

Talks broke down in part over the diocese's plan to protect all of its parishes and local affiliates from lawsuits as part of the bankruptcy settlement. Abuse survivors said those local organizations had not contributed enough money to the settlement to warrant the legal protections they would have received.

Stang said on Monday that a bankruptcy settlement could still be reached if the diocese makes its proposal more attractive to abuse survivors. Survivors might be more inclined to vote for a deal with better economics or non-monetary concessions, like an apology and pledge to protect children from abuse in the future.

"We think the parishes can afford to pay much more and still maintain their religious mission," Stang said.

The diocese said that it had spent over $106 million on attorneys and other bankruptcy professionals since filing for Chapter 11, including $33 million to the attorneys representing abuse survivors.

If the bankruptcy is dismissed, abuse survivors would be free to continue their lawsuits against the diocese in New York state courts.

Richard Tollner, who chaired the official committee representing abuse survivors in the bankruptcy, said that the dismissal would send a strong message to other debtors who are "using bankruptcy to avoid accountability before state court juries."

"If your plan does not have the support of the survivors' creditors' committee, your reorganization plan will fail," Tollner said in a statement.

In re The Roman Catholic Diocese of Rockville Centre, New York, U.S. Bankruptcy Court for the Southern District of New York, No. 20-12345.

Story credited from Reuters.com

Red Lobster seeks a buyer as it looks to avoid bankruptcy filing

Thu, 25 Apr 2024 17:56:47 GMT

The longtime chain, known for its cheddar bay biscuits and unlimited shrimp, has been considering filing for bankruptcy as it contends with sluggish sales and a number of lengthy and costly leases.

Beleaguered seafood chain Red Lobster is seeking a buyer as it looks to avoid filing for bankruptcy.

The company has considered filing for bankruptcy to help it restructure its debt and get out of a number of costly and lengthy leases, but it’s also sought a buyer in recent months, people familiar with the matter told CNBC.

At least one firm had been interested in buying the chain, but a deal never came to fruition.

It’s unclear how the chain will ultimately resolve its financial woes. Red Lobster could secure a buyer, it could declare bankruptcy or its lenders could take control of the company.

Even if Red Lobster finds a buyer, it would be hard for it to avoid filing for Chapter 11 as it is trying to get out of many leases and those contracts can be difficult to break outside of bankruptcy, the people said. Bloomberg first reported that Red Lobster was mulling a Chapter 11 filing last week.

For the past decade amidst ownership changes, Red Lobster has taken on debt and entered into a number of long-term leases across its 700-plus locations, which have weighed on its balance sheet.

The broader casual-dining segment has struggled for roughly two decades in competition with fast-casual chains like Panera Bread and Chipotle Mexican Grill. The pandemic exacerbated the issue, particularly hurting full-service restaurants like Red Lobster.

The seafood chain has also struggled from some self-inflicted wounds, most notably its disastrous “endless shrimp” promotion. Last year, it changed the offer from once a week to daily to boost slower sales in the second half of the year.

But the offer juiced business too much as diners sought cheap deals, pressuring Red Lobster’s bottom line. As a result, Red Lobster reported $11 million in losses in the fiscal third quarter and $12.5 million in losses the following quarter.

Story credited from CNBC.com

Supreme Court Allows $2.4 Billion Boy Scouts Sex Abuse Deal to Go Forward

Thu, 22 Feb 2024 22:58:54 GMT

The justices denied an emergency request by a group of victims to pause the deal, allowing the settlement to proceed.

The Supreme Court cleared the way on Thursday for a $2.4 billion plan to settle sex abuse lawsuits against the Boy Scouts of America to go forward. The court’s brief, unsigned order gave no reasons, which is typical for emergency applications. There were no public dissents.

The Boy Scouts settlement involves more than 82,000 claims of childhood sexual abuse, with more than 86 percent of victims in the case backing the deal.

However, the group who asked the Supreme Court to intervene objected to the use of the mechanism, which protected from liability third parties like churches involved in scouting, local councils and insurers.

The outcome in the Boy Scouts case had been closely watched as a possible clue of where the justices might lean in the Purdue Pharma bankruptcy settlement. During oral arguments in December, the justices appeared divided, and a decision in that case is expected by the end of the court’s term, likely in late June.

The victims’ group, in asking the court to step in, argued that if the settlement were allowed to proceed, sexual abuse victims “will lose their right to pursue their claims independently of the bankruptcy settlement trust.”

The Boy Scouts had argued that the settlement should continue as planned, warning that if the justices blocked the deal, it would “threaten to throw the scouting program into chaos.”

The challengers represented “a tiny fraction” of the victims involved in the deal, the Boy Scouts said.

After Justice Samuel A. Alito Jr. temporarily paused the settlement earlier this month, the bankruptcy judge overseeing the case suspended work on the deal, which has already paid about $8 million to several thousand victims.

On Thursday, after the court announced its decision, the trust handling the settlement said it had “resumed all operations, including processing and paying claims.”

Article originally taken from NYT online.

Rudy Giuliani Files for Bankruptcy After $148 million Jury Verdict and mounting debts.

Thu, 21 Dec 2023 17:59:05 GMT

Rudy Giuliani filed for bankruptcy in New York after being ordered to pay $148 million in damages to two Georgia election workers.

The former New York Mayor has also listed more than $500 million in debt while racking up millions in legal fees.

The attorney who led the effort to overturn the 2020 election has been swamped my mounting legal issues.

Last Friday, he was put on the precipice of financial ruin when a jury awarded $148 million in damages to Ruby Freeman and Shaye Moss for claiming they tried to rig the vote for Joe Biden.

In August he admitted having 'financial problems' as he battled multiple court cases and said he didn't have enough money to defend himself.

In the filing, Giuliani said he had between $100 million and $500 million in liabilities and $1 million to $10 million in assets.

Giuliani said he owed $148 million to Ruby Freeman and Wandrea Moss, the two former Georgia election workers.

The filing also listed President Joe Biden's son, Hunter Biden, as a creditor, without specifying the amount Giuliani owed him. Hunter Biden in September sued Giuliani for violating his privacy over data allegedly taken from his laptop.

Giuliani listed the Internal Revenue Service and New York State Department of Taxation and finance among his creditors.

Rite Aid Filed for Chapter 11 Bankruptcy because of Opioid Related Lawsuits.

Thu, 21 Dec 2023 17:30:34 GMT

Rite Aid has filed for bankruptcy and plans to sell part of its business as it attempts to restructure while dealing with losses and opioid-related lawsuits.

Rite Aid has filed for bankruptcy protection and plans to sell part of its business as it attempts to restructure while dealing with losses and opioid-related lawsuits.

The company said Rite Aid stores will continue to fill prescriptions, and customers will still be able to visit its locations or shop online while it goes through its voluntary Chapter 11 process. But that process also will allow it to speed up its plan to close underperforming stores.

Going through Chapter 11 will help “significantly reduce the company’s debt” while helping to “resolve litigation claims in an equitable manner,” Rite Aid late Sunday.

Rite Aid Corp. said in its federal bankruptcy filing that it runs more than 2,000 stores. Most of its locations are on the East and West Coasts.

The Philadelphia company, which is marking its 60th year in business, has posted annual losses for several years and has been cutting costs and closing stores as it dealt with long-standing financial challenges. It has said it expects a net loss of as much as $680 million in the current fiscal year, which will end next spring.

The company, like its rivals, also faces financial risk from lawsuits over opioid prescriptions. Rite Aid already has reached several settlements, including one announced last year with the state of West Virginia for up to $30 million.

In March, the U.S. Justice Department intervened in a whistleblower lawsuit brought by former employees under the False Claims Act. Federal officials said in a statement that the drugstore chain filled “at least hundreds of thousands” of illegal prescriptions for drugs including opioids.

Rite Aid called the government’s claims “hyperbolic” in a subsequent motion to dismiss. The company said facts alleged in the case actually showed it exceeded regulatory requirements for diversion control.

Drugstores also have been dealing with several issues that frustrate customers. They’ve handled prescription drug shortages, and they have struggled to fill their stores with enough pharmacists and technicians to run the pharmacies. Rivals CVS and Walgreens both have dealt with walkouts by pharmacy employees concerned about their growing workloads and lack of help.

The stores also have had to weather tight prescription reimbursement and waning COVID-19 vaccine and testing business in recent quarters. Plus online competitors like the retail giant Amazon have hurt sales of consumer goods found outside the pharmacy areas of their stores.

Rite Aid’s larger competitors like CVS and Walgreens, which each run several thousand more locations, have moved more aggressively into health care, opening clinics and adding other sources of revenue.

Deutsche Bank analyst George Hill said in an August note that Rite Aid operates on a much thinner profit margin than its competitors and while it can pay costs to service its debt, it won’t be able to cover principal payments “based on the current trajectory of the business.”

The company’s filing in U.S. Bankruptcy Court in New Jersey listed $8.6 billion in total debts and $7.6 billion in assets.

Rite Aid said Sunday that it had reached an agreement with some key creditors on a financial restructuring plan to cut its debt. The company also said it obtained $3.45 billion in fresh financing from some of its lenders, which will help support the company through the Chapter 11 process.

Rite Aid says it does not know yet which stores it will close, but it will transfer workers to other Rite Aid locations where possible.

Article credited by the Associated Press

Sam Bankman-Fried’s cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy protection in the U.S.

Fri, 13 Oct 2023 20:05:13 GMT

Bankman-Fried has also stepped down as CEO and has been succeeded by John J. Ray III, though the outgoing chief will stay on to assist with the transition.

Approximately 130 additional affiliated companies are part of the proceedings, including Alameda Research, Bankman-Fried’s crypto trading firm, and FTX.us, the company’s U.S. subsidiary.

In the 23-page bankruptcy filing obtained by CNBC, FTX indicates it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, as well as liabilities in the range of $10 billion to $50 billion. By comparison, Lehman had more than $600 billion in assets and Enron had $60 billion.

“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said the new FTX chief, Ray.

“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency,” continued Ray.

He added that stakeholders should understand that events have been fast moving, that the new team is engaged only recently and that they should review the materials filed on the docket of the proceedings over the coming days for more information.

It caps off a tumultuous week for one of the biggest names in the sector.

In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company. FTX founder Bankman-Fried admitted on Thursday that he “f---ed up.”

Anthony Scaramucci, founder of SkyBridge Capital and short-time Trump communications director, flew to the Bahamas this week to help Bankman-Fried as an investor and friend. When Scaramucci got there, he says, it appeared beyond the point of a simple liquidity rescue. He said he didn’t see evidence of this mishandling when he and other investors first screened FTX as a potential business partner.

“Duped I guess is the right word, but I am very disappointed because I do like Sam,” Scaramucci said Friday morning on CNBC’s “Squawk Box.” “I don’t know what happened because I was not an insider at FTX.”

An FTX spokesperson did not immediately respond to CNBC’s request for comment on this story, including on Scaramucci’s remarks.

In a short period of time, FTX expanded into non-crypto elements of life, such as pop culture. For example, in the past Super Bowl, it aired a commercial featuring comedian Larry David, in which David turned down an opportunity to invest in crypto. “Ehh, I don’t think so. And I’m never wrong about this stuff. Never.”

Article credited by CNBC.com

Bed, Bath & Beyond Files for Ch. 11 Bankruptcy

Fri, 13 Oct 2023 19:58:13 GMT

Bed Bath & Beyond filed for Chapter 11 bankruptcy protection in April 2023 after it failed in several last-ditch efforts to raise enough money to keep the company alive.

The beleaguered home goods retailer has been warning of a potential bankruptcy since early January, when it issued a “going concern” notice that it may not have the cash to cover expenses after a dismal holiday season. Shares of the company closed at 29 cents Friday, giving it a market value of $136.9 million. The stock is down about 88% this year. Last April, it was trading around $20 a share.

The company’s 360 namesake stores and 120 Buybuy Baby locations will remain open for the time being as it begins to close the business and liquidate assets. But it has filed motions in New Jersey bankruptcy court asking permission to auction the two brands, the company said in a release. It has already committed to closing all of its Harmon FaceValue stores.

As of late November, Bed Bath had about $4.4 billion in assets and $5.2 billion in debts, court filings show. Alongside a long list of creditors, including vendors like Pinterest, Keurig and Blue Yonder, it owes the most to BNY Mellon at $1.18 billion, the documents show. It has between 25,001 and 50,000 total creditors and employs about 14,000 non-seasonal workers, court filings say.

Bed Bath has been hanging on by a thread since January but has refused to go down without a fight. It secured what was then-considered a Hail Mary stock offering in early February that was expected to infuse more than $1 billion in equity into Bed Bath, but the plan faltered and brought in only $360 million, the company said.

At the end of March, Bed Bath announced another stock offering it hoped would bring in $300 million, but that news sent the share price tumbling and it struggled to raise the funds it hoped the offering would provide. As of April 10, the company had sold approximately 100.1 million shares and raised only $48.5 million.

In filings, the company warned if it didn’t raise the anticipated proceeds from the offering, it would likely have to file for bankruptcy protection.

Days after the second stock offering was announced, Bed Bath said it had partnered with liquidator Hilco Global to boost its inventory levels. Under the agreement, Hilco subsidiary ReStore Capital agreed to buy up to $120 million in merchandise from the company’s key suppliers after relationships with Bed Bath’s vendors soured because of its liquidity issues.

However, the plans ultimately proved futile.

The retailer has struggled to maintain relationships with its vendors and has been grappling with low inventory levels, lagging sales and a rapidly dwindling cash pile.

Going into the holiday season, Bed Bath had difficulty keeping its shelves stocked and because of its liquidity issues, some vendors began asking for prepayments, the company said in securities filings.

In late March, the company reported preliminary results for its fiscal fourth quarter, with net sales of roughly $1.2 billion and comparable store sales declining in the range of 40% to 50%. The company noted negative operating losses have continued, although it said it hadn’t depleted its free cash flow.

The company reported $2.05 billion in revenue for the fiscal fourth quarter of 2021.

Article taken from CNBC.com

Trucking Company Yellow Filed for Bankruptcy

Fri, 28 Jul 2023 17:15:51 GMT

The debt-laden company and the Teamsters union have been feuding, causing uncertainty that is imperiling one of the nation’s largest freight operations

Trucking company Yellow is preparing to file for bankruptcy, according to people familiar with the matter, heightening the threat that one of the nation’s largest freight carriers will shut down as customers abandon it amid a cash crunch and union negotiations.

A bankruptcy filing by Yellow would put it at high risk of a liquidation since its customers already have started to abandon the trucker in large numbers, some of the people said. The company could seek bankruptcy court protection as soon as this week, though no decision has been made and Yellow continues to explore other options, they said.

A Yellow representative said Wednesday that “in keeping with the fiduciary responsibility of the company’s executives, the company continues to prepare for a range of contingencies.”

Yellow has been losing thousands of shipments to other operators because of the risk that a labor dispute will disrupt its operations, according to equity analysts and industry executives. The company averted a planned strike this week by the Teamsters union that represents most of its workforce, but the customer exodus has continued. Yellow has seen freight volumes fall 80% in recent days, according to a research report Tuesday by TD Cowen.

“The Teamsters introduced variability and uncertainty into a market that can’t stand variability and uncertainty,” said Mike Regan, chief of relationship management at TranzAct Technologies, which manages transportation services for retailers and manufacturers.

The company is continuing to negotiate with the Teamsters about a new contract that would give Yellow the ability to restructure its operations to make them more efficient, Yellow’s representative said.

A bankruptcy filing would again spotlight the $700 million Covid-19 rescue loan that Yellow received from U.S. taxpayers in 2020. A congressional probe later concluded that the Treasury Department erred in giving the loan on national-security grounds when Yellow didn’t meet the standards for that designation.

Nashville, Tenn.-based Yellow has $1.3 billion in debt maturities next year, according to securities filings. Earlier this month, the company negotiated an agreement with lenders including the Treasury Department and Apollo Global Management that gave it some breathing room by temporarily suspending required earnings targets.

Of the $1.3 billion in loans the company has coming due next year, $729 million are from the government, according to Yellow’s latest quarterly report. The company reported about $1.48 billion in total debt at the end of the first quarter against $806 million in assets.

Yellow’s liquidity problems have mounted this year as declining shipping demand has cut into freight volumes and sent rates falling. Its cash holdings fell to around $100 million at the end of June from $235 million at the end of December.

The carrier sought this spring to institute a widespread overhaul of operations to lower costs and make its businesses more efficient. That triggered a series of sharp exchanges between the Teamsters and Yellow, which last month sued the union for allegedly costing the company business.

The union said Sunday that it had withdrawn plans for a walkout after a pension fund agreed to continue to extend health benefits to unionized workers at Yellow and a sister company. The pension fund said it would give Yellow another 30 days to make some deferred payments.

If customers pull back further from Yellow, the company’s remaining shipments would go to a range of other carriers, including FedEx Freight, ArcBest subsidiary ABF Freight, XPO and Old Dominion Freight Line. That would likely drive up pricing in a sector that has seen freight rates and demand tumble this year, according to industry experts.

Article credit of wsj.com online

If you’re facing bankruptcy, here’s what experts say to do before, during and after you file

jpbrooke@gmail.com (John Brooke) — Fri, 19 Aug 2022 16:38:26 GMT

It’s best to work with experts to make sure your personal bankruptcy is handled correctly and eases rather than complicates your financial life.

Personal bankruptcy filings have fallen dramatically since the beginning of the coronavirus pandemic, but with interest rates rising and government relief waning, filing numbers will likely pick up through this year, say experts.

Bankruptcy attorney David Leibowitz, head of Chicago-based Lakelaw, said his firm has “already seen filings in the Chicago area pick up by about 25% in the last two months.”

The variety of government stimulus programs, enhanced tax credits and protections against evictions and loan foreclosures put in place in the last two years have reduced the number of bankruptcy filings.

Bankruptcy may feel like rock bottom for financially strapped Americans, but it is also a new start and an opportunity to get out of hole that only seems to get deeper for many.

“If you can pay off your debts outside bankruptcy, you should,” said Leibowitz, a past chairman of the consumer bankruptcy committee of the American Bankruptcy Institute. “However, if your wages are being garnished, your car has been seized and you’re being hounded by collection agencies, bankruptcy may be imperative.”

If you’ve decided bankruptcy is your best option, your first decision is whether to hire a lawyer to help you through the process. You can file with the courts on your own, but the cost of mistakes is high.

What chapter of the code should you file under? What forms do you need to complete? What mistakes must you avoid? Bankruptcy law is complex and while you may save money filing on your own, you could lose much more on the back end.

“People don’t do their own dental work,” Juntikka said. “You need to consult a lawyer.”

What to do

The bankruptcy process involves a series of steps and procedures that have to be followed. The kind of bankruptcy filing you choose will depend on your circumstances.

Chapter 7 bankruptcy filings, which account for a significant majority of personal filings, can ultimately discharge most, though not all, personal debts. Alimony, tax debts and student loans are among the liabilities that may remain for petitioners. Most of your property is subject to seizure and sale, although there are some exemptions, such as retirement account balances.

To qualify for Chapter 7, you have to pass a means test. Essentially, your income must be less than the median income of the state where you file. Otherwise, you have to file under Chapter 13 of the code.

In that situation, some unsecured debts may be forgiven and you may be able to keep some personal property, but it basically creates a debt repayment plan, typically over a five-year period.

Here are individual steps you need to take in a bankruptcy filing:

Gather the documents you will need, including tax returns, pay stubs, bank, brokerage and retirement account statements, appraisals of real estate and other assets you own, vehicle registrations and any other documents pertaining to debts you owe or assets you own.
All bankruptcy filers have to complete a credit counselling course both before and after filing. The fee is typically less than $50 and may be waived if you’re unable to pay it.
Fill out and print the appropriate bankruptcy forms, get your filing fee ($338 for a Chapter 7 filing in federal court), file the forms in court and mail the necessary documents to your appointed bankruptcy trustee.
Attend the meeting remotely with your trustee. It takes place about a month after your case is filed.

All these steps are essential, and having an attorney can help ensure you don’t make mistakes.

What not to do

The biggest mistake people make in bankruptcy filings is trying to game the system. All your assets may be seized in a bankruptcy and failing to disclose all of them can result in criminal charges

Just ask tennis player Boris Becker, currently looking at jail time in the U.K. for hiding assets. Do not transfer property to family or friends before you file. It will be clawed back.

Also don’t max out your credit resources before you file. The court will not look kindly upon it. Never use funds from retirement accounts to pay off debt.

“Truth and transparency are critical to the bankruptcy process,” said Leibowitz. “Honest debtors get a fresh start, while dishonest ones can potentially go to jail.”

What to do post-bankruptcy

Declaring bankruptcy can feel like the ultimate failure, but there is life after bankruptcy. Leibowitz advises clients to take the following steps to get their lives back in order:

Establish a budget you can stick to.
Open a savings account and save a month’s worth of income to provide a financial cushion for unexpected expenses.
Get a secured credit card and use it only for expenses you can pay off at the end of the month.
Pay your rent and bills on time.
Check your credit report regularly to make sure no debts discharged in bankruptcy remain outstanding on your profile.

If you follow a disciplined plan, you can quickly improve your credit profile and even be eligible for a Federal Housing Administration mortgage in as little as three years.

“There is such a stigma associated with bankruptcy,” Leibowitz said. “But the idea of rehabilitation and forgiveness is baked into our constitution.

“Bankruptcy can give people a second chance.”

Story taken from www.cnbc.com

Revlon Cosmetics Maker Files for CH. 11 Bankruptcy

jpbrooke@gmail.com (John Brooke) — Fri, 19 Aug 2022 16:32:24 GMT

Cosmetics giant Revlon filed for Chapter 11 bankruptcy protection on Wednesday evening as it grappled with a cumbersome debt load and a snarled supply chain.

The company said it expects to receive $575 million in debtor-in-possession financing from its existing lender base, which will help to support its day-to-day operations.

The filing “will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth,” Revlon President and Chief Executive Officer Debra Perelman said in a press release issued Thursday morning.

“Our challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand,” Perelman added.

Revlon’s bankruptcy filing said the company is currently unable to timely fill almost one-third of customer demand for its products, due to an inability to source a “sufficient and regular supply of raw materials.” Shipping components from China to the United States takes Revlon eight to 12 weeks and costs four times 2019 prices, it said.

Revlon is the first major consumer-facing business to file for bankruptcy protection in what has been a years long pause of distress in the retail sector. More than three dozen retailers filed for bankruptcy in 2020, marking an 11-year high, which experts say was an extensive and Covid pandemic-driven pull-forward of restructuring activity.

Now, however, as inflation rages, interest rates rise and consumers begin to pull back spending on discretionary items, experts predict more retail companies will be pressured to restructure. Particularly as many of these businesses grapple with ongoing supply chain challenges that have left them with the wrong inventories.

The nail polish and lipstick maker, which is controlled by billionaire Ron Perelman’s MacAndrews & Forbes, listed assets and liabilities between $1 billion and $10 billion, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

Revlon had long-term debt of $3.31 billion as of March 31, a securities filing shows. The company’s market cap was nearly $123 million as of the close of trading Wednesday. Trading of Revlon shares was halted in Thursday’s premarket session.

Its sales of about $1.9 billion in 2020 were down 21% from 2019 levels. Though the business rebounded in 2021, Revlon’s revenue is still below pre-pandemic levels.

Start-ups including Glossier, Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty have also challenged Revlon as it vies for younger consumers’ dollars.

Revlon could use its time in bankruptcy proceedings to prune its portfolio, given it owns numerous brands, some of which are performing better than others, said David Silverman, a retail senior director at Fitch Ratings.

“If executed effectively, Revlon could emerge from bankruptcy with a cleaner balance sheet and a better operating profile, improving longer term business prospects,” Silverman said.

Story originally taken from CNBC.com

Infowars bankruptcy tossed in deal with Sandy Hook parents

Fri, 10 Jun 2022 18:01:08 GMT

A federal judge in Texas on Friday dismissed the bankruptcy protection case of Infowars and two other companies controlled by Alex Jones, the result of an agreement between lawyers for the conspiracy theorist and parents of some of the children slain in the 2012 Sandy Hook Elementary School shooting.

U.S. Bankruptcy Judge Christopher Lopez approved the deal after a brief court hearing. The judge’s action allows the parents’ defamation lawsuits against Jones to continue in Texas and Connecticut, where trials are pending on how much he should pay families after judges in both states found Jones and his companies liable for damages.

The families’ lawsuits say they have been subjected to harassment and death threats from Jones’ followers because of the hoax conspiracy. Jones, based in Austin, Texas, has since said he believes the shooting did occur.

Relatives of eight of the 20 first graders and six educators killed in the massacre and an FBI agent who responded to the school in Newtown, Connecticut, are suing Jones and Free Speech Systems.

Infowars, Prison Planet TV and IW Health consented to dismissing the bankruptcy case last week after the families agreed to drop the three companies from their defamation lawsuits. Those lawsuits will continue against Jones himself and his largest moneymaking company, Free Speech Systems.

The families and the U.S. trustee’s office — a Justice Department agency that oversees bankruptcy cases — had questioned the legitimacy of the three companies’ bankruptcy filing and sought to throw out the case, saying it was only a tactic to delay the lawsuits. Jones’ lawyers denied the allegations.

Article taken from https://apnews.com/article/politics-texas-victoria-school-shootings-76618718255edcfe1270cf293f5c8876

Purdue Pharma OxyContin Maker in Bankruptcy

Thu, 09 Dec 2021 17:38:33 GMT

Sackler family says billions collected from Purdue not abuse of bankruptcy law

Members of the Sackler family on Monday said billions of dollars they collected from Purdue Pharma before the company filed for Chapter 11 was the result of extra cash, not part of a "secret plan" to abuse the bankruptcy system.

In court papers, lawyers for the Sackler family members, who controlled Purdue, rejected U.S. District Judge Colleen McMahon’s suggestion that the more than $10 billion Purdue paid out in the years leading up to the 2019 bankruptcy could amount to an abuse of the Chapter 11 process. Around half of the money went to taxes or business investments, according to court documents.

The Sacklers are alleged to have drained Purdue of cash over several years. When it eventually filed for bankruptcy in the face of lawsuits over the epidemic, the company needed Sacklers' money to settle the billions of dollars of legal claims. In return, the Sacklers were able to demand protection from the lawsuits.

The Sacklers rejected the notion that there was any "scheme" to "deliberately weaken Purdue so it could not reorganize without" their financial contribution.

There is no evidence to suggest the payments “were made as part of a secret plan” to abuse the bankruptcy system, the Sackler lawyers said. They called the idea “pure fiction.”

McMahon is considering whether to overturn a bankruptcy court ruling that shields the Sacklers from liability over the opioid epidemic. If she finds that there is sufficient evidence of abuse, she could send the matter back to the bankruptcy court to reconsider the shield.

More than 500,000 people have died from opioid overdoses since 1999, according to the Centers for Disease Control and Prevention.

The payments, the Sacklers argued, were made as business grew, including increased revenue following the restoration of Purdue's patent for OxyContin in 2008.

The Sacklers, who have denied wrongdoing and did not file for bankruptcy themselves, have contributed about $4.5 billion to a settlement of opioid-related litigation in exchange for protection against future lawsuits.

Purdue argued in a separate filing on Monday that the protections are necessary because the company cannot exit bankruptcy without resolving opioid-related claims against both Purdue and the Sacklers.

The U.S. Department of Justice’s bankruptcy watchdog, the U.S. Trustee, has long opposed this type of litigation shield and said on Monday in court filings that the law offers no such protections for people who have not filed for bankruptcy.

The U.S. Trustee accused the Sacklers of “piggybacking” off Purdue’s bankruptcy to protect themselves.

“If this is not abuse of the bankruptcy system, it is unclear what is,” the trustee said.

Article taken from Reuters.com by Maria Chutchian

Boys Scouts Bankruptcy Plan

Fri, 25 Jun 2021 15:52:40 GMT

The latest bankruptcy plan filed by the Boy Scouts of America increases the contributions from the BSA and its local councils to a proposed trust fund for child sex abuse victims while appearing to back away from a controversial settlement with one of the BSA’s insurers.

Under a revised plan submitted late last week, the Boy Scouts are offering to issue an $80 million unsecured promissory note to a trust fund for abuse victims. The BSA also is proposing to use restricted assets to help cover post-bankruptcy operational expenses, which would make up to $50 million in unrestricted cash available for abuse survivors. With the changes, the BSA’s proposed contribution to the trust fund would increase from about $120 million under a previous plan to as much as roughly $250 million.

The BSA also said its local councils would contribute $500 million into the fund for abuse victims, up from $425 million offered in the previous plan. The new proposal calls for the councils to contribute $300 million in cash and the remainder in property with a combined appraised value of $200 million.

The BSA, its 250 or so local councils and hundreds of sponsoring organizations such as churches and civic groups would be released from further liability in exchange for contributions to the trust fund and the transfer of insurance rights.

In a prepared statement, the Boy Scouts described the revised plan as “a significant step” toward a global resolution of abuse claims.

“The BSA is hopeful that this plan, or one very similar to it, will have the support of a supermajority of survivors,” the organization said.

A hearing regarding the latest proposal is scheduled for July 20.

Meanwhile, the Boy Scouts appear to be backing way from a previously announced settlement in which one of the group’s insurers, The Hartford, agreed to pay $650 million into the victims trust in exchange for being released from any further obligations under policies dating to 1971. The agreement allows The Hartford to pay a lesser amount if the BSA or the settlement trust reaches an agreement with another major BSA insurer, Century Insurance Group, and Century’s settlement amount is less than two times The Hartford’s, or $1.3 billion.

The Hartford settlement was roundly criticized by attorneys for abuse victims, who estimate the insurer’s liability exposure at several billion dollars.

“We see dropping Hartford as a positive,” Jim Stang, an attorney for the official committee representing abuse victims, said Monday.

The BSA acknowledged in last week’s court filing that it can’t win support for a global resolution of the sex abuse claims that drove the organization into bankruptcy if the Hartford settlement is included in its plan. Attorneys representing the official committee, a plaintiffs group called the Coalition of Abused Scouts for Justice, and potential future abuse claimants told BSA lawyers in a letter two weeks ago that abuse survivors would not, “under any circumstances,” support any plan that includes the Hartford settlement.

“It appears the global resolution plan cannot be confirmed to the extent it includes the Hartford insurance settlement agreement unless modifications are made … that are agreeable to the holders of direct abuse claims,” BSA attorneys wrote.

Attorneys for the Boy Scouts indicated that they would ask the bankruptcy judge at next month’s hearing if they are obligated to further pursue the settlement with The Hartford, which requires court approval, given the universal opposition from abuse victims. If not, BSA lawyers intend to drop the settlement from the plan.

The Boy Scouts of America, based in Irving, Texas, sought bankruptcy protection in February 2020, moving to halt hundreds of lawsuits and create a compensation fund for men who were molested as youngsters decades ago by scoutmasters or other leaders.

Attorneys for abuse victims have said they would go after properties and assets owned by the BSA’s local councils. The councils, which run day-to-day operations for local troops, are considered legally separate entities by the Boy Scouts, even though they share insurance policies and are considered “related parties” in the bankruptcy.

Attorneys for the Boy Scouts have said that between $2.4 billion and $7.1 billion, including insurance rights, might be available for abuse victims. The official victims committee, which is known as the tort claimants committee and is charged with acting as a fiduciary for all abuse victims, estimates the value of some 82,500 sexual abuse claims at about $103 billion.

Article originally appeared in insurancejournal.com

New York State Passes Strongest Eviction and Foreclosure Moratorium in the Nation

Thu, 31 Dec 2020 17:26:55 GMT

Evictions and Foreclosures Stopped Until May 1, 2021

Legislation Advanced by the Senate Majority Will Be Passed During a Special Session on Monday, December 28th

(Albany, NY) The Senate Democratic Majority today announced a Special Session will take place on Monday, December 28 to pass the COVID-19 Emergency Eviction and Foreclosure Prevention Act. This legislation is the strongest bill in the nation to block eviction proceedings from going forward and will help ensure New York renters and homeowners can stay in their homes if they are facing hardships due to the pandemic. Any pending eviction proceedings, or any commenced within 30 days of the effective date of this legislation, will be stayed for at least 60 days to give tenants an opportunity to submit the hardship declaration. This effectively implements a two-month moratorium to ensure New Yorkers in need are able to take advantage of this legislation and the protections it provides.

“The bill advanced by the Senate Majority will help ensure New York tenants, homeowners, and small landlords will not have to fear being kicked out of their homes if they’ve been impacted by this pandemic and economic crisis,” Senate Majority Leader Andrea Stewart-Cousins said. “I commend Senate Housing Committee Chair, Senator Brian Kavanagh for his leadership on this issue, and my Senate Majority colleagues for taking this historic action. We will continue to lead New York State forward during this crisis and provide real relief to help New Yorkers in need.”

Senate Housing Committee Chair and Bill Sponsor, Senator Brian Kavanagh said, “From the beginning of the COVID-19 pandemic we have understood that housing security must be an essential part of our effort to protect the health and wellbeing of all New Yorkers. By enacting this comprehensive residential eviction and foreclosure moratorium, we are delivering real protection for countless renters and homeowners who would otherwise be at risk of losing their homes, adding to the unprecedented hardship that so many are facing. I thank Leader Stewart-Cousins, Senator Myrie, Assembly sponsor Assemblymember Dinowitz, the legislative staff, all the tenant and homeowner advocates who have pushed for real relief, and the many New Yorkers who have struggled through these extraordinarily difficult times with the tenacity and resolve we will need to get beyond this crisis.”

The legislation advanced by the Senate Majority, the COVID-19 Emergency Eviction and Foreclosure Prevention Act ( S.9114 / A.11181 ), will:

Prevent Evictions: This bill creates a Standardized Hardship Declaration Form, which tenants can submit in court or to their landlords to prevent or halt an eviction if they experience financial hardship due to the COVID-19 pandemic that prevents them from being able to pay their rent in full, or move; or if someone in the household is at increased risk of severe illness from COVID.
- The form allows tenants to declare financial hardship if they have lost income; have increased health, child care, or other family care expenses; have been unable to obtain meaningful employment because of circumstances relating to COVID-19; or cannot afford moving expenses.
- Once a tenant has signed this form, they may return it to their landlord or to a court to prevent a landlord from filing an eviction, or to suspend an eviction proceeding already underway until May 1, 2021, in addition to other protections.
Protect Against Foreclosure and Tax Lien Sales For Residential Property Owners: This bill provides protections against foreclosure and tax lien sales to any residential property owner that owns ten or fewer dwelling units, including their own primary residence.
- Property owners will be able to access foreclosure and tax lien sale protection by filing a Standardized Hardship Declaration Form with their mortgage lender, local assessor, or with a court, similar to that created by the eviction protection proposal. The owner will declare, under penalty of perjury, a financial hardship that prevents them from paying their mortgage or property taxes because of lost income, including reduction in rent collections; increased expenses; or the inability to obtain meaningful employment.
- Landlords with more than ten total units are excluded from these protections.
Prohibit Negative Credit Reporting and Discrimination in Extending Credit: This bill protects a property owner from credit discrimination if the owner has fallen behind on mortgage payments on the property at which they reside or because they have received a stay of mortgage foreclosure, tax foreclosure, or tax lien sales on the property.
- Homeowners will use the same Hardship Declaration to avoid credit discrimination based on their mortgage arrears on the property at which such owner resides.
- The legislation limits these new protections only to single home residences, co-ops, owner-occupied multifamily primary residences with one to nine rental units.
- Additionally, the legislation will prohibit negative reporting to any credit agency of the granting or imposition of a stay on mortgage foreclosure proceedings, or tax foreclosure proceedings or tax lien sale on such property.
Automatically Renew Senior Citizens’ Homeowner and Disabled Homeowner Exemptions: This bill will require local governments to automatically renew the annual requirement that eligible recipients recertify their Senior Citizens’ Homeowner Extension (SCHE) and Disabled Homeowner Exemption (DHE) benefits for 2021. Normally, eligible recipients need to file renewal applications, sometimes in person at the assessor’s office.
- The Governor issued Executive Order (202.83) permitting local governments to automatically renew these exemptions at local option.
- This bill requires local governments to automatically renew these exemptions, and will additionally allow for exemption increases if the homeowner is entitled to one.

Throughout the COVID-19 pandemic, the Senate Democratic Majority has worked to ensure government continues to function during this unprecedented crisis. At the start of this crisis, the Senate took action to enable remote participation and allocated $40 million to help confront the pandemic. The Senate also passed legislation to ensure New Yorkers had access to paid leave if they were subjected to a mandatory or precautionary quarantine, and waived the 7-day waiting period for unemployment insurance applications. Following the 2020 State Budget , the Senate Majority advanced a major legislative package to protect New Yorkers’ rights, healthcare, and housing access, help struggling workers and businesses , and maintain quality of life and essential government services. Additionally, the Senate Majority has held hearings on COVID-19 and its impact on New York residential health care facilities and hospitals , workers and small businesses , courts and corrections systems, elections , mass transit systems , veterans , and cultural community .

Press release taken from nysenate.org.

Is Student Loan Discharge in Bankruptcy Now Within Reach?

Thu, 22 Oct 2020 17:13:37 GMT

Student loan borrowers who seek to have their debt canceled in bankruptcy — what's known as discharge — typically find it an expensive process with standards that can be difficult to meet. But recent bankruptcy court rulings and lawmakers' support of relief for overburdened borrowers may signal a change is coming.

In January, a New York court discharged over $200,000 of student loan debt for one borrower. Then, in August, a federal appeals court ruling eliminated $200,000 for a Colorado couple who held 11 private student loan accounts. And in September, a New York judge ruled to enforce a prior bankruptcy discharge of a borrower’s $400,000 of federal student loans that a servicer had failed to carry out.

These decisions could serve as a precedent for future bankruptcy cases involving student loans, says John Rao, an attorney with the National Consumer Law Center.

"A lot of people, even some of the lawyers who represent consumers, thought for years that you really shouldn’t even try because there's not a chance you’ll win, but I think everyone is looking at it now with sort of a fresh look," Rao says.

Courts aren’t the only example of potentially easing standards. The House of Representatives recently took up a bill that would expand bankruptcy relief to more student loan borrowers. And the platform of former Vice President Joe Biden, the Democratic presidential candidate, included a bankruptcy reform proposal to end rules that make it "nearly impossible" to discharge private student loan debt.

A possible reason for a shift toward dismissing these loans in bankruptcy is the student loan debt crisis in the U.S.

Overall student loan debt increased 107% in the past decade, according to data analyzed by the Federal Reserve Bank of St. Louis. Higher education experts say the extra hoops borrowers must jump through to get student loan relief with bankruptcy make discharge more expensive and difficult to achieve than canceling other types of consumer debt.

"To get to those hoops, you usually need more money to pay, and usually the people who are trying to declare bankruptcy on their loans don’t have that money available to them," says Douglas Webber, associate professor of economics at Temple University.

Why student loan discharge in bankruptcy poses a challenge

Here’s why student loans are so onerous to get rid of in a bankruptcy filing:

It’s cost-prohibitive. As Webber says, the whole process is expensive for borrowers who can expect to pay several thousand dollars for filing and attorney’s fees.

Bankruptcy courts are notoriously stringent. After filing for bankruptcy, a second action, an Adversary Proceeding, must be filed to ask the court to find that the debt would prove an "undue hardship" to repay. Then, borrowers have to prove they meet the standards of "undue hardship," a concept that’s left to bankruptcy judges to interpret.

The undue hardship standard is especially difficult for federal student loan borrowers to prove due to the safety nets offered to those borrowers, such as payment pauses and repayment plans.

To meet the standard, cases typically must pass the "Brunner test," named for a student who attempted to discharge her student loans in bankruptcy less than a year after earning her master's degree (she was denied).

To pass the Brunner test, loans must meet these conditions:

Payments would keep you from maintaining a minimal standard of living.
You’re unlikely to earn enough money to make payments on your loans in the foreseeable future, usually due to a disability.
You’ve already made good faith efforts to repay your loans such as making some payments or negotiating a lower payment plan.

The Brunner test is more difficult for federal loan borrowers to meet because of income-driven repayment, which is available to all federal direct loan holders. This plan helps borrowers keep payments manageable by setting payments at a portion of their income. It could be as low as $0 for those who are unemployed or underemployed (those who earn below 150% of the poverty line).

How to strategize student loan discharge in bankruptcy

You won’t know if your student loans are discharged until the end of bankruptcy proceedings so make sure to pay what you can until then.

You must apply for Chapter 7 or Chapter 13 bankruptcy. Contact a student loan lawyer or bankruptcy attorney with student loan experience — if you can afford to — to find out the best option for you. Otherwise, there are a few free or inexpensive resources available through Legal Services Corporation or Student Loan Borrower Assistance.

Once you’ve filed for bankruptcy, you’ll need your attorney to file a written complaint outlining your case through an Adversary Proceeding. The rest is left up to the judge to determine whether you will receive any discharge or not.

What to do if you’re denied a discharge

Bankruptcy isn’t the only option to unburden yourself of loan debt. You could file an appeal or seek an alternative resolution: settling the debt for less than you owe. You won’t have the full debt forgiven, but it may be a more achievable option.

If bankruptcy or settlement aren’t options for you, enrolling in an income-driven repayment is still the best choice to keep repayment affordable. Private loan borrowers should contact their lender to find out the options available to lower payments.

Article originally taken from nerdwallet.com

Brooks Brothers files for Bankruptcy Protection

Fri, 10 Jul 2020 18:40:26 GMT

Here is a list of major household name retailers that have filed bankruptcy due to Pandemic

Thousands of businesses have been driven to bankruptcy by the coronavirus, and you’ve likely never heard of most of them. But a handful of household names, many of them already struggling before the pandemic, are among the firms closing stores, laying off employees, and restructuring due the economic turmoil created by the virus. And while bankruptcy doesn’t often spell death for large companies, it can sometimes lead to liquidation of the business.

In the first half of 2020, more than 3,600 companies filed for bankruptcy, according to Epiq. Just over 600 filed in June, up 43 percent from June of last year. And experts predict that things are only going to get worse.

Here are some of the biggest name firms to file for bankruptcy in 2020:

April

Diamond Offshore and Whiting Petroleum : The two oil companies cited a steep decrease in demand during lockdown and the oil price war between Saudi Arabia and Russia.

May

J.Crew : The Times called J.Crew the coronavirus’s “first major retail casualty” when its parent company filed for Chapter 11 protection in early May. The company has said “day-to-day operations” will continue.

Gold’s Gym : The gym chain proactively closed 30 company-owned gyms in April before declaring for bankruptcy in May. It said the decision will not “prevent us from continuing to support our system of nearly 700 gyms around the world.”

Neiman Marcus : After years of building an unsustainable debt burden, Neiman Marcus was brutalized by the coronavirus, which caused all of its 43 stores to temporarily close. The luxury chain is now considering closures around the country, including in Manhattan, where it opened a three-story, 188,000-square-foot behemoth at Hudson Yards just last year.

J.C. Penney : Prior to coronavirus, the footprint of the once-iconic mall retailer had fallen to less than a quarter of what it was in 2001. After its mid-May bankruptcy filing, it’s going to fall more. The company is planning to shutter 154 stores.

Hertz : If no one is traveling, no one needs to rent a car. Car rental giant Hertz was dealt a “rapid, sudden and dramatic” blow by the coronavirus, the company said in May, leading to the biggest bankruptcy filing of 2020.

Tuesday Morning : Pandemic-inspired shutdowns created an “insurmountable financial hurdle” for the off-price retailer, which is planning to close more than 200 of its 700 stores.

PQ New York : The owner of Le Pain Quotidien closed all 98 of its U.S. locations during the pandemic and sold them to another restaurant company that will reopen 35 of the locations and, presumably, close the rest.

June

GNC : The 85-year-old vitamin retailer saw 30 percent of its stores in the U.S. and Canada temporarily close during the height of the pandemic. The “dramatic negative impact” of these closures led to a bankruptcy filing in late June. Roughly 20 percent, or 1,200 of its 5,800 retail stores will close.

24 Hour Fitness : After its bankruptcy filing on June 14, 24 Hour Fitness will transition 133 of its locations to Zero Hour Fitness. That is to say, they’re closing.

Chuck E. Cheese : On the same day that CEC Entertainment, which owns 550 Chuck E. Cheese and Peter Piper Pizza locations, reopened 266 venues, it also filed for bankruptcy. The company said the filing will allow it to “strengthen our financial structure as we recover from what has undoubtedly been the most challenging event in our company’s history.”

July

Lucky Brand : Founded in 1990, the denim company Lucky Brand will close 13 of its 200 stores after filing for bankruptcy brought on by the coronavirus. “The COVID-19 pandemic has severely impacted sales across all channels,” interim CEO Matthew Kaness said in a statement. It also announced plans for a sale to SPARC Group, which owns the brands Nautica and Aeropostale.

Brooks Brothers : The iconic clothing company isn’t calling it quits, but it is up for a major restructuring after a bankruptcy filing on July 8. Owner Claudio Del Vecchio told the Wall Street Journal that the pandemic ravaged revenues for a company already struggling amid a national shift to more casual dress. Its three U.S. factories are slated to close in mid-August and the company will search for a new buyer.

Story taken from NY Mag online.

Coronavirus Corporate Bankruptcy Filings

Mon, 22 Jun 2020 16:32:05 GMT

Here is a list of major companies that filed bankruptcy due to the lockdown

Some of the biggest names in corporate America are in danger of going the way of Sears, Blockbuster and RadioShack.

The coronavirus pandemic has accelerated the demise of companies that were already in trouble as Americans (and their dollars) stay home amid lockdowns and economic shutdowns. Oil and gas drillers like Whiting Petroleum and Diamond Offshore filed for bankruptcy in late April, and J.Crew became the first major U.S. retailer to do the same on May 4. More are on the way.

“It has been a poorly-kept secret that a number of the big-box retailers were struggling,” says Scott Williams, a bankruptcy attorney at RumbergerKirk. “There has not been a dramatic uptick in the last 45 days. What I think you’ve seen is lots of people being forced into, ‘I’m going to get there at some point.’”

Bankruptcy isn’t a death sentence. Companies that file Chapter 11 bankruptcy negotiate with creditors to restructure debt terms. (Those that file Chapter 7 are typically liquidating assets and calling it quits.) General Motors went insolvent during the last financial crisis in 2009 and regained its footing and profitability as America’s largest automaker. Delta, United and American Airlines have all endured bankruptcy reorganizations in the last two decades.

Here are the major companies with at least 500 employees that have filed for bankruptcy in 2020. This list will be updated as more join the group:

24 Hour Fitness filed on June 15 and announced that it will permanently close more than 100 of its roughly 400 gyms, citing the “disproportionate impact” of the coronavirus pandemic on the fitness industry.

Advantage Rent A Car filed on May 26 , four days after its competitor Hertz, with global travel still ground to a halt.

Illinois-based pharmaceutical company Akorn filed on May 20 , two years after Fresenius backed out of a planned $4.3 billion takeover over quality control concerns.

The ALDO Group , a Montreal-based shoe retailer that operates about 3,000 locations in more than 100 countries, filed on May 7 under pressure from store closures.

Private-equity-backed APC Automotive filed on June 3 . Demand for auto parts has sunk during the pandemic and import tariffs on metals have cut into its margins as well.

Apex Parks Group , which had to close its 12 entertainment centers and water parks due to the pandemic, filed for a Chapter 11 reorganization on April 8.

Art Van Furniture , a midwestern retailer with 176 locations, filed on March 8 . As the economic crisis worsened, it converted its Chapter 11 reorganization to a Chapter 7 liquidation in early April.

Avianca , which served more than 30 million passengers last year as one of Latin America’s largest airlines, filed on May 10 with all of its passenger flights grounded since mid-March due to Covid-19.

Bar Louie , a nationwide gastropub chain, filed on January 27 after closing 38 of its locations, leaving less than 100 remaining.

Bluestem Brands , the parent company of seven e-commerce subsidiaries, filed on March 9 .

Borden Dairy followed competitor Dean Foods DF into bankruptcy on January 5 , aiming to reduce its debt load while continuing normal operations.

British rent-to-own operation BrightHouse entered administration —the equivalent of a bankruptcy process—on March 30, immediately halting all new rent-to-own and cash loan lending activities.

U.K.-based Italian restaurant chain Carluccio’s entered administration on March 30, shortly after its 73 locations were required to close.

Centric Brands , an apparel manufacturer that licenses its clothing to designer brands like Calvin Klein and Tommy Hilfiger, filed on May 18 . It aims to reduce its debt by $700 million and continue normal operations.

CMX Cinemas , a movie theater chain that also owns dine-in restaurants and bars, filed on April 25 with all 41 of its theaters closed nationwide during the pandemic.

Trucking conglomerate Comcar Industries filed on May 17 and announced it was selling its five operating companies.

Fast casual restaurant chain Cosi filed for Chapter 11 on February 24 for the second time since 2016 after shuttering 30 of its locations in December.

Restaurant franchisor CraftWorks filed on March 3 to reduce its debt by more than $140 million shortly after closing about 10% of its locations.

Dean & DeLuca , a luxury grocery store chain with 42 locations until it started downsizing in recent years, filed on April 1 .

British fashion retailer Debenhams , which employs more than 20,000 people, entered administration on April 6 for the second time in the last year as it struggled to stay afloat with its stores closed. It is liquidating its business in Ireland, permanently closing its 11 stores there.

Diamond Offshore Drilling sought bankruptcy protection on April 27 after skipping a payment to bondholders. It had billions of dollars of debt even before oil prices plunged in recent weeks.

Jamaica-based telecom provider Digicel filed for Chapter 15 , which allows foreign creditors to participate cases, on May 15.

Earth Fare , a North Carolina-based organic grocery chain, filed on February 4, a day after announcing it was closing all of its stores and liquidating its inventory.

South African retailer Edcon filed for business rescue on April 29, announcing that it had lost 2 billion rand in sales—equivalent to more than $100 million—due to coronavirus.

Industrial battery maker Exide Technologies , based in Georgia with more than 8,000 employees in 80 countries, filed on May 22 and agreed to sell its businesses in Europe and Asia.

Tri-state grocery chain Fairway Market filed on January 23 and announced it was selling up to five New York City stores and its distribution center to Village Super Market for $70 million.

British airline Flybe , one of Europe’s largest regional carriers, entered administration and grounded all flights on March 5.

Foodora , a food delivery app that is a subsidiary of Berlin-based Delivery Hero, filed for insolvency in Canada on April 27 and announced it’s ceasing operations in the country on May 11.

St. Louis-based coal miner Foresight Energy filed on March 10 with $1.4 billion in debt.

Frontier Communications FTR , one of America’s largest telecom companies, filed on April 14. Its reorganization plan is expected to reduce its sizable debt load by $10 billion.

Gold’s Gym filed on May 4 after having to close its 700 fitness centers due to coronavirus lockdowns. Thirty gyms will remain permanently closed.

Helios and Matheson , the parent of movie-theater subscription service MoviePass, filed for Chapter 7 bankruptcy on January 29. MoviePass had more than 3 million subscribers at its peak in 2018.

Car rental company Hertz filed on May 22 with nearly $18 billion in net debt on its balance sheet and coronavirus crushing business travel and tourism. It laid off 10,000 of its North American employees in April.

Singapore-based oil trader Hin Leong , founded by ex-billionaire Lim Oon Kuin , filed on April 18 as the company revealed it had $800 million in previously undisclosed losses.

Hornbeck Offshore Services , which operates a fleet of offshore oil supply ships in the Gulf of Mexico and Latin America, filed a prepackaged plan on May 19. Its shares peaked at about $60 in 2013, but have traded below $1 since July of last year.

IntegraMed America , which offers nearly 100 medical facilities and fertility centers in the U.S. services like egg freezing, filed on May 20 .

Intelsat filed on May 13 , though it said it will continue to launch new satellites. The pioneering company put the first commercial communications satellite in space in 1965.

Virginia-based cloud services provider Internap filed on March 16 to renegotiate its debt. It was delisted from the Nasdaq the next week.

JCPenney filed on May 15 , weighed down by $4.2 billion in debt. The prominent department store chain has lost money for nine straight years, and its troubles were exacerbated by the pandemic that forced its 850 remaining locations to close.

J.Crew was the first big American retail domino to fall amid the pandemic, filing on May 4 to convert about $1.7 billion of debt to equity. It still plans to reopen its 181 J.Crew stores, 170 factory stores and 140 stores for its women’s clothing brand Madewell after coronavirus-related restrictions are lifted.

J.Hilburn , a Dallas-based luxury menswear retailer rooted in one-on-one contact with customers for its custom-made suits and shirts, filed on May 4 .

Southeast burger chain Krystal filed on January 19 , citing debts of between $50 million and $100 million.

Latam Airlines became the largest carrier yet to go bankrupt when it filed on May 26 with the pandemic suffocating demand, though it will continue operating its limited passenger and cargo stats as scheduled.

Le Pain Quotidien’s U.S. arm, PQ New York, filed on May 27 and announced plans to be sold to restaurant conglomerate Aurify Brands, which will keep 35 of its 98 bakeries in the U.S. open.

Libbey , an Ohio-based glass tableware manufacturer for restaurants and bars that no longer needed new drinking glasses while they were closed, filed on June 1 .

Mexican energy company Libre Abordo announced it was bankrupt on May 31 after oil prices collapsed this spring.

Commercial magazine printer LSC Communications filed on April 13 with nearly $1 billion in debt after an antitrust lawsuit blocked an attempted $1.4 billion sale to competitor Quad/Graphics QUAD last year.

Organic grocer Lucky’s Market filed on January 27 and plans to sell most of its stores to Aldi, Publix and other winning bidders.

Pharmaceutical manufacturer Mallinckrodt submitted a Chapter 11 filing for its specialty generics unit on February 25 and offered to pay a $1.6 billion settlement under the weight of lawsuits related to opioid abuse.

McClatchy , which operates 30 newspapers in 14 states, filed on February 13 , ending 163 years of family control of the business and signaling the continuing erosion of local news.

McDermott International , a commercial construction and engineering company, initiated a Chapter 11 process on January 21 to eliminate $4.6 billion in debt.

Modell’s Sporting Goods , a New York institution since 1889, filed for Chapter 11 on March 11 and announced plans to close all 153 of its stores spread throughout the northeast.

Swedish fashion retail chain MQ filed on April 16 as sales plunged at its physical locations while customers stayed home due to the pandemic.

Neiman Marcus filed on May 7 , seeking to eliminate $4 billion in debt. The renowned luxury retailer has 43 Neiman Marcus locations as well as 22 stores for its Last Call discount brand and two Manhattan Bergdorf Goodman stores. Business at all of them has been upended by coronavirus shutdowns.

NMC Healthcare , a large hospital operator in the United Arab Emirates, filed for Chapter 15 in the U.S. on May 28 after revealing in March that it had under-reported its debt by $2.7 billion.

Clothing conglomerate Nygard Entities filed for Chapter 15 on March 19. The company was under fire after a class-action lawsuit filed in February levied sex-trafficking allegations against founder Peter Nygard.

OneWeb , a satellite internet startup backed by SoftBank that launched 74 satellites into space, filed on March 27 .

Upscale stationary chain Papyrus’ parent company filed on January 24 and closed all 254 of its stores.

Pier 1 , a home furniture chain with close to 1,000 locations at the beginning of the store, began a Chapter 11 reorganization on February 17, before the weight of the pandemic even reached the U.S. Shares were trading at more than $460 in 2013 before beginning a steep and steady decline.

San Antonio-based oil and gas servicer Pioneer Energy filed on March 2 , though it is continuing operations.

Rural hospital chain Quorum Health filed a prepackaged chapter 11 plan on April 7 to reduce its debt by $500 million.

RavnAir , an intrastate airline in Alaska, ceased operations and laid off all staff when it filed for bankruptcy on April 5 .

Reitmans , a prominent Canadian fashion retailer with 576 stores, began a restructuring process on May 19.

RentPath , an online search platform for rental homes, filed on February 11 while at the same time announcing it was being bought out of bankruptcy by competitor CoStar Group CSGP for $588 million.

Rubie’s Costume Company , the world’s largest Halloween costume manufacturer, filed on April 30 as sales declined while its retail customers are closed due to Covid-19.

Canadian retail superstore Sail Outdoors filed on June 2 . It reopened its 14 locations in Quebec and Ontario in May after weeks of coronavirus-related closures.

Skillsoft , a corporate e-learning and talent development servicer, filed on June 14 to reduce its debt to $410 million from about $2 billion.

New Zealand furniture and appliance retailer Smiths City entered receivership on May 21 to expedite its sale to Polar Capital.

Specialist Leisure Group , a British company with 44 hotel and travel brands like Shearings, a century-old tour bus operator, entered administration on May 22 and cut 2,460 jobs. Only 70 employees remained to wind down the business.

Canadian auto parts manufacturer Spectra Premium filed on March 10. In a press release , the company complained that efforts to cut supply chain costs were hampered by tariffs the U.S. imposed on China.

Speedcast International , a satellite internet company that provides connectivity to the embattled cruise industry when ships are out at sea and serves 80% of cruise brands globally, filed on April 23 .

Discount retailer Stage Stores , which owns brands like Gordmans and Bealls, filed on May 10 and will begin to liquidate its inventory when 557 of its stores reopen from coronavirus shutdowns on May 15.

Wisconsin-based auto parts and plastics manufacturer Techniplas filed on May 6 as it hopes to find a buyer.

True Religion , a designer jeans retailer with locations of its own in 26 states and a presence in other major department stores, filed on April 13 for the second time in less than three years.

Discount retailer Tuesday Morning filed on May 27 and expects to close about 230 of its 687 stores nationwide. In the first phase of its reorganization, it will close at least 132 locations and its Phoenix distribution center.

Oklahoma shale driller Unit Corporation filed on May 22 during the global commodity price crunch, aiming to reduce its debt by $650 million.

Virgin Australia , one of Australia’s largest airlines co-founded by billionaire Richard Branson, filed on April 21 after the Australian government denied the company’s pleas for a bailout.

Vision Group Holdings , which pversees two Lasik eye surgery providers, filed on May 30 with demand for elective surgeries all but disappearing.

Whiting Petroleum filed on April 1 , though it said it would continue to operate its business. Shares of the publicly-traded shale driller dipped below $1 in March after trading at more than $150 in 2015.

Article credit of Forbes.com

J.Crew, Neiman Marcus and other retailers filed Chapter 11 Bankruptcy

Tue, 19 May 2020 20:35:56 GMT

Many retailers had financial trouble before the pandemic

The word “bankruptcy” comes with dark undertones: J.Crew announced it was filing for Chapter 11 bankruptcy last week, for example, and was immediately the subject of instantaneous eulogies, ours included. Over the weekend, my mom lamented that she wouldn’t be able to shop there anymore while the brand was in fact still operational: “ sunny days ahead ,” the advertisement prominently displayed on its website read. But I can’t blame mom or anyone else who buried J.Crew, Neiman Marcus, John Varvatos, or the other retailers who have filed for Chapter 11—bankruptcy is more confusing than Michael Scott thinks.

Wait, the stores and brands declaring bankrupt are staying open for now?
You betcha. J.Crew wrote out in its FAQ section , “We are and will remain fully operational throughout this restructuring process.” Without COVID-19-related shutdowns, your local stores would probably be open right now ready to get you into some oxford-cloth button-down shirts or waxed jackets.

So what does bankruptcy mean, then?
“There are several different kinds of bankruptcy,” explains Nancy B. Rapoport, a professor of law at William S. Boyd School of Law, University of Nevada, Las Vegas who specializes in bankruptcy and was involved with Toys”R”Us’s Chapter 11 case. “What you tend to see is one of two things: a Chapter 11 reorganization or a Chapter 7 liquidation. That’s a gross oversimplification.” But gross oversimplifications will mostly do for now, so stick with me.

The bankruptcy process allows a company in unsustainably deep debt to pay back its lenders. The most gruesome way to do that is Chapter 7: the company is sliced up and absolutely everything is sold off, with the proceeds going to the creditors. “Everything from the inventory to the trademarked names to the toilet paper in the executive washroom,” says Robert M. Lawless, a professor of law specializing in bankruptcy at the University of Illinois College of Law.

That seems bad!
It is bad, and for more than the reasons you think. Not only does the business go out of business, but the banks that have lent the bankrupt company over the years are incredibly unlikely to get their money back from toilet paper (even the premo stuff executives use). So for all parties involved, Chapter 11 is preferred. “The lenders want to get paid back and they know the best way to get paid back is by having the business continue to operate and be profitable,” says Lawless.

Chapter 11 is ultimately an optimistic action to take. “What you're seeing is a hope that the business itself is fundamentally sound and can be reorganized by getting rid of some things that are burdensome and starting with some new rules,” says Rapoport.

Why now? A company like J.Crew was already operating with $1.65 billion in debt.
“Usually you see a company end up in Chapter 11 when they run out of cash,” says Lawless. Presumably, these companies tapped into every resource and weren’t able to make enough cash to remain operational. That’s when you turn the page and—bang—Chapter 11.

Using J.Crew as an example, the company and the law firm it’s partnered with will put together a reorganization plan intended to get the company back to profitability—and that makes it possible for lenders to get paid back fairly. The plan is presented in bankruptcy court. “The debtor, or whoever's proposing the plan, has to put on evidence to prove feasibility,” says Rapoport. “You put on experts, they testify, someone can cross examine them, and then the goal is to figure out a plan so they won’t be back [in bankruptcy].”

If a plan for reorganization can’t be agreed upon, the company moves into a sale. Forever 21 went through this, and was eventually bought up by Simon Property Group, the largest owner of shopping malls in the U.S. Lawless says that while a generation ago, reorganizations were common, asset sales are now much more standard. The money made from these sales goes directly into the pockets of the creditors these companies owe.

It’s likely that the companies going through bankruptcies will move forward with either an agreed-upon reorganization or sale. Courts often want bankrupt companies to succeed rather than file for liquidation, “because it's better for the economy if businesses keep going,” says Rapoport. This way people keep their jobs, creditors continue to get paid, and there are less vacant storefronts. Lawless says courts are already pretty lenient when approving bankruptcy plans for exactly that reason. Too lenient, perhaps: in a study he conducted, he found that almost none of the business projections companies sunnily forecast in bankruptcy court are ever actually achieved. “Bankruptcy judges want companies to succeed,” he says.

How will COVID-19 affect these filings?

Despite the fact that courts already go relatively easy on companies in bankruptcy, Lawless says that the pandemic might encourage them to be even gentler. Now, companies can argue that the cause of their great financial strain is this once-in-a-lifetime global event. “With Neiman Marcus, what you're hoping is [that] some of this was COVID,” says Rapoport. “They couldn't keep the stores open and although there's online shopping, it's not the same thing. So if they think that this is a temporary problem, the leases are too high and they can't get relief on the leases but the fundamental business is sound.” That may not be totally true, but it’s an argument Neiman Marcus can make.

Original story taken from GQ.com

Neiman Marcus in Talks to File Bankruptcy

Tue, 24 Mar 2020 17:28:03 GMT

(Reuters) - Luxury retailer Neiman Marcus Group Inc is in talks with lenders to file for bankruptcy as it struggles to ease its $4.3 billion debt load, Bloomberg reported on Monday, citing people familiar with the matter.

Neiman Marcus has been struggling with the debt load, due mainly to its 2013 leveraged buyout by Ares and Canadian public pension fund CPPIB from other private equity firms.

Bloomberg reported Neiman Marcus has held initials talks with lenders about a potential bankruptcy loan that would help keep the company running while it works out a recovery plan.

Neiman Marcus was not immediately available for a comment.

Modell's Sporting Goods Retailer Files Bankruptcy

Tue, 24 Mar 2020 17:23:29 GMT

Modell's will close all stores due to lower sales, increased debt

While the names on the back of the jerseys have changed over the decades, from Strawberry to Syndergaard, the retail chain that sold them has been a fixture for more than a century: Modell’s Sporting Goods.

But now the company’s run — one that started when Morris A. Modell opened his first store on Cortlandt Street in Lower Manhattan in 1889 — appears to be coming to an end.

On Wednesday, Modell’s filed for Chapter 11 bankruptcy protection, citing diminished sales of sports apparel and millions in unpaid debts to vendors and landlords.

Modell’s, known for its catchy “Gotta Go to Mo’s” jingle as much as its jerseys and sneakers, also announced on Wednesday that it was shuttering all of its remaining 141 stores. A liquidation sale will begin on Friday at each store, which will then close once all of the merchandise is sold, a process that Modell’s top executive said could take up to seven weeks.

The company, which is based in Manhattan, has 3,600 employees and has stores throughout the Northeast and Mid-Atlantic regions. It claims to be the oldest sporting goods retailer.

Mitchell Modell, 65, the company’s president and C.E.O., said in an interview on Wednesday night that it was a gut-wrenching decision.

“Today, I had the worst day of my life,” Mr. Modell said.

He added that the combination of an unseasonably warm winter, six fewer days in the shopping season this year between Thanksgiving and Christmas, competition from Amazon and the coronavirus pandemic have hurt the company’s bottom line

The futility of New York sports franchises like the Knicks, Jets and Giants has not helped either, he said.

“The problem is if the teams are lousy, you can’t give the goods away,” said Mr. Modell, who ran the company with his brother, Michael Modell, before he died in 2001.

Joseph Favorito, a Columbia University lecturer who specializes in marketing and business development with a focus on sports, said on Twitter that losing teams were being scapegoated.

“In reality a failure to adapt to a new economy & delivery system is the reason,” Mr. Favorito wrote.

Four generations of Modells have run the business, which Mr. Modell said began when his great-grandfather Morris A. Modell sold hats and gloves to people getting off ships from Europe in Lower Manhattan.

Original story from NYTimes.com

Forever 21 Clothing Retailer Filed Bankruptcy

Tue, 24 Mar 2020 17:08:21 GMT

Forever 21 was once among America's fastest-growing fast-fashion retailers.

It transformed its once penniless founders into billionaires, established itself as a powerhouse in the fast-fashion world, and, at its peak, made $4.4 billion in revenue.

But the once flush company is now preparing to file for bankruptcy. So, what happened?

Back in the day, Forever 21 embodied the American dream: In 1981, Jin Sook and Do Won "Don" Chang moved to Los Angeles from South Korea with no money, no college degrees, and speaking little English. To make ends meet, Jin Sook worked as a hairdresser while Don worked as a janitor, pumped gas, and served coffee. Until he noticed that "the people who drove the nicest cars were all in the garment business." So three years later, with $11,000 in savings, the Changs opened a 900-square-foot clothing store called Fashion 21. The couple took advantage of wholesale closeouts to buy merchandise from manufacturers at a discount.

Their system worked. The store made $700,000 in sales its first year.

Fashion 21 was initially only popular with LA's Korean American community. But the Changs leveraged their success, opening new stores every six months, which broadened the company's customer base at the same time. They also changed the name to Forever 21 to emphasize the idea that it was "for anyone who wants to be trendy, fresh and young in spirit."

The company's key to success was simple: cultivate a huge following by selling trendy clothing for low prices. While this is something that today's consumers pretty much expect, Forever 21 was one of the first to do it. And they were the fastest.

Jin Sook was eventually approving over 400 designs a day. Which meant the company could sell trends as they were happening. Even if some of those designs landed Forever 21 in trouble.

But while other brands and designers might not have been Forever 21's biggest fans, customers couldn't get enough of their affordable styles.

As a result, Forever 21 became one of the largest tenants of American malls, with 480 locations nationwide. And by 2015, business was booming. Forever 21's sales peaked, with $4.4 billion in global sales that year.

As for the Changs? They became one of America's wealthiest couples, with a combined net worth reaching an estimated $5.9 billion in March 2015.

Forever 21's goal was to become an $8 billion company by 2017 and open 600 new stores in three years. But the company's aggressive expansion would also lead to its downfall.

Part of what made Forever 21 popular in the first place was its fast-fashion model. Even though its products were always mass-produced, they still felt unique because its stores only sold select styles for a limited time.

However, as the company focused on growing bigger, its styles became more "cookie-cutter." As a result, Forever 21 started to lose touch with its core customers, while competitors like H&M and Zara rose.

No longer the trendsetter, Forever 21 became the butt of the joke.

It's also no longer the fastest in the game. Internet brands like Fashion Nova churn out celebrity- and influencer-inspired styles at a rapid-fire pace. And as e-commerce has continued to boom, traditional retailers like Forever 21 have struggled to adapt to changing consumer behaviors. According to a March 2019 survey, millennials make 60% of their purchases online and overall prefer online shopping over going to a physical store.

Yet, Forever 21 continued opening new stores as recently as 2016, even expanding existing stores to take over multiple floors with mens, children's, and home-goods sections. Which could help explain why Forever 21's sales are estimated to have dropped by 20% to 25% in 2018.

On top of that, the Changs, who still own the company, have lost more than $4 billion from their personal net worths.

The company overall is now $500 million in debt and considering filing for bankruptcy.

Forever 21 has already started downsizing its stores. And as one of the largest tenants of America's mall's, a widespread shutdown of Forever 21 could exacerbate what's already being referred to as the "retail apocalypse," which has already closed more than 15,000 retailers across the US and could shut down 75,000 more, according to investment firm UBS.

But bankruptcy doesn't always mean the end for a company.

In fact, it could give Forever 21 time to restructure and bounce back.

The company could shut down its least profitable stores and try rebranding itself. But in an age of cheap internet boutiques and fast-fashion empires, this might not be enough.

So it turns out, Forever 21 might not be forever after all.

Original story courtesy of businessinsider.com

Boy Scouts of America Files for Chapter 11 Bankruptcy

Tue, 18 Feb 2020 15:44:26 GMT

The Organization Faces Hundreds of Sex Abuse Claims

The Boy Scouts of America has filed for bankruptcy, a sign of the century-old organization's financial instability as it faces some 300 lawsuits from men who say they were sexually abused as Scouts.

The organization says it will use the Chapter 11 process to create a trust to provide compensation to victims. BSA's scouting programs will continue throughout.

The Boy Scouts had been exploring the possibility of bankruptcy since at least December 2018, when the group hired a law firm for a possible Chapter 11 filing. Chapter 11 usually involves the debtor making a reorganization plan to keep its business alive and pay its creditors over time.

The filing was made in Delaware, and is expected to set a new deadline for victims' claims to be made.

The Boy Scouts also published a carefully worded open letter to victims of abuse. The letter, signed by BSA National Chair Jim Turley, reads in part:

"I am outraged that individuals took advantage of our programs to commit these heinous acts.

"I am also outraged that there were times when volunteers and employees ignored our procedures or forgave transgressions that are unforgivable. In some cases, this led to tragic acts of abuse. While those instances were limited, they mean we didn't do enough to protect the children in our care — to protect you.

"On behalf of myself and the entire Scouting community: I am sorry. I am devastated that there were times in the past when we failed the very children we were supposed to protect."

The letter encourages people who were abused to come forward and file claims so they can receive compensation from the trust that will be created.

Amid high-profile sexual abuse scandals in organizations from the Catholic Church to USA Gymnastics, some states have changed their laws to allow more time for victims of sexual abuse to sue their perpetrators. That has brought a wave of new lawsuits from victims whose cases were prevented previously by statutes of limitations.

The Boy Scouts' potential liability is large. Mones points to just one case he won in Portland, Ore., in 2010, where the judgment against the organization was nearly $20 million.

For many years, the Boy Scouts had insurance that would cover it against sexual abuse claims. But in recent years these carriers have been withdrawing coverage, arguing that the Boy Scouts organization knew about the abuse and didn't tell its insurance companies. That has left the Boy Scouts with the prospect of having to fund any litigation and settlements itself.

The Boy Scouts' most recent tax filing shows total revenue of more than $285 million. With significant land holdings across the U.S., the organization's assets in 2018 totaled $1.4 billion.

The national organization might hope that its bankruptcy filing will shield the assets of its local councils, similar to how Catholic dioceses were able to protect their properties and parishes from claims.

BSA was clear on this point in its statement on Tuesday: "Local councils, which provide programming, financial, facility and administrative support to Scouting units in their communities, have not filed for bankruptcy. They are legally separate, distinct and financially independent from the national organization."

Story credit of NPR.com

Pier One Files for Bankruptcy

Tue, 18 Feb 2020 15:37:03 GMT

New York (CNN Business)- Pier 1, the troubled home furnishings retailer that has closed hundreds of stores in recent years, filed for bankruptcy Monday.

The company, based in Fort Worth, Texas, released a statement saying that it reached a plan with lenders to provide it with $256 million. It will try to find a buyer for the company.

Pier 1 ( PIR ) previously announced it will close up to 450 stores, including all its locations in Canada. Around 400 stores have already closed or started going-out-of-business sales, according to the statement.

The company currently has more than 500 stores open.

"Today's actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale," Pier 1's CEO Robert Riesbeck said. He assumed that post in November and is also the company's chief financial officer.

During Pier 1's latest quarter, sales at stores open for at least one year decreased 11.4% compared to the same period last year. The company lost $59 million.

Pier 1 is far from the only casualty of retail competition and shifting consumer habits.

In 2019, US retailers announced 9,302 store closings, a 59% jump from 2018 and the highest number since Coresight Research began tracking the data in 2012. So far this year, Macy's ( M ), Papyrus and others have announced store closings.

The home goods sector has been hit particularly hard by the rise of Amazon, Wayfair and other online competition. Big-box chains such as Target and Walmart have also strengthened their home goods' offerings.

PG&E Files Bankruptcy After California Wildfires

jpbrooke@gmail.com (John Brooke) — Mon, 06 Jan 2020 17:01:06 GMT

Pacific Gas and Electric has filed for bankruptcy protection after coming under pressure from billions of dollars in claims tied to deadly wildfires.

California's largest power company said in a statement Tuesday that it had submitted a Chapter 11 bankruptcy filing in the Northern District of California.

PG&E said it was committed to maintaining services for customers during the bankruptcy process.

John Simon, the company's Interim CEO, said he would work "to create a more sustainable foundation for the delivery of safe, reliable and affordable service."

"We have heard the calls for change and we are determined to take action throughout this process to build the energy system our customers want and deserve," he said in the statement.

PG&E has been linked to a series of wildfires in California, including the Camp Fire, which caused 86 deaths and destroyed 14,000 homes, along with more than 500 businesses and 4,300 other buildings.

PG&E announced on January 14, 2019 that it intended to file for bankruptcy, but it had to wait 15-day period required by California law.

The company needs to use the bankruptcy process — which will allow it to shed some of its debt — to pay for damages and stay in business.

PG&E said Tuesday it was seeking approval for a $5.5 billion debtor-in-possession financing agreement. Previously, it said in a filing that it has only about $1.5 billion in cash and cash equivalents on hand.

The company has cited at least $7 billion in claims from the Camp Fire. It is believed that the Camp Fire was started when a PG&E power line came in contact with nearby trees.

PG&E reported "an outage" on a transmission line in the area where the blaze began, about 15 minutes before it started. Within the massive burn area, PG&E found power equipment and a fallen power pole riddled with bullet holes, according to a letter it sent to regulators. The company also reported that it found a downed line with tree branches on it.

In addition, a series of wildfires in 2017 — many of which were also blamed on PG&E — caused $10 billion in damages and 44 deaths. In 11 of those fires, state investigators found the company violated codes regarding brush clearance near its power lines or had made related violations.

Article credit of CNN.com

BORDEN MILK PRODUCER FILES BANKRUPTCY

jpbrooke@gmail.com (John Brooke) — Mon, 06 Jan 2020 16:54:28 GMT

Second recent big milk producer to file bankruptcy within a year

(Bloomberg) -- Borden Dairy Co. filed for bankruptcy, becoming the second major U.S. milk seller to do so in two months as competitive pressures, declining consumption and falling profits made its debt load unsustainable.

Known for its mascot Elsie the Cow, the Dallas-based company listed assets and liabilities of between $100 million and $500 million in its Chapter 11 filing in Delaware. The company, founded more than 160 years ago, said in a statement that normal operations will continue while it works out a recovery plan.

A boom in dairy alternatives like soy, rice and nut milk, along with rising prices for raw milk have put the squeeze on Borden, Chief Financial Officer Jason Monaco said in court papers. Added pressure came from retailers investing in their own low-cost dairy products.

“While milk remains a household item in the United States, people are simply drinking less of it,” Monaco said. “In parallel, since the turn of the century, the number of U.S. dairy farms has rapidly declined.”

Higher Costs

That’s choking supply, with the price of raw milk up 27% since January 2019 and expected to rise more, even as retail prices and margins are dropping, court papers show. The same trends helped drive Borden’s larger rival, Dean Foods Co., to file for bankruptcy on Nov. 12.

Private equity firm ACON Investments LLC and affiliates acquired Borden in 2017 and the company received debt facilities from GSO Capital Partners and PNC Bank, according to a statement at the time.

Affiliates of KKR Credit Advisors US LLC and Franklin Square Holdings LP now hold $175 million of Borden debt in the form of a term loan, while PNC holds a $30 million term loan and a $75 million revolving loan.

“Borden is Ebitda-positive and growing, but we must achieve a more viable capital structure,” Chief Executive Officer Tony Sarsam said in a statement, referring to the widely followed profit measure of earnings before interest, taxes, depreciation and amortization. “This reorganization will strengthen our position for future prosperity.”

Liquidity Needed

Borden reported a net loss of $42.4 million for 2019 through Dec. 7, widening from 2018’s $14.6 million deficit on net sales of $1.18 billion.

To continue operating in bankruptcy, Borden needs to tap an account containing $26.6 million that it established in 2017 to pay for a settlement with two pension funds, Monaco said.

Borden has more than 3,200 employees, about 22% of whom are unionized, Monaco said. The firm retained Conway MacKenzie Inc. for financial advice.

The case is Borden Dairy Co., 20-10010-CSS, U.S. Bankruptcy Court for the District of Delaware.

This article taken from Bloomberg.com

Puerto Rico Filed for Bankruptcy

jpbrooke@gmail.com (John Brooke) — Tue, 11 Dec 2018 18:00:51 GMT

With its creditors at its heels and its coffers depleted, Puerto Rico sought what is essentially bankruptcy relief in federal court on Wednesday, the first time in history that an American state or territory had taken the extraordinary measure.

The action sent Puerto Rico, whose approximately $123 billion in debt and pension obligations far exceeds the $18 billion bankruptcy filed by Detroit in 2013, to uncharted ground.

While the court proceedings could eventually make the island solvent for the first time in decades, the more immediate repercussions will likely be grim: Government workers will forgo pension money, public health and infrastructure projects will go wanting, and the “brain drain” the island has been suffering as professionals move to the mainland could intensify.

Puerto Rico is “unable to provide its citizens effective services” because of the crushing weight of its debt, according to a filing on Wednesday by the federal board that has supervised the island’s financial affairs since last year.

The total includes about $74 billion in bond debt and $49 billion in unfunded pension obligations.

While many of Puerto Rico’s circumstances are unique, its case is also a warning sign for many American states and municipalities — such as Illinois and Philadelphia — that are facing some of the same strains, including rising pension costs, crumbling infrastructure, departing taxpayers and credit downgrades that make it more expensive to raise money. Historically, Puerto Rico was barred from declaring bankruptcy. In the end, however, financial reality trumped the statutes, and Congress enacted a law last year allowing bankruptcy-like proceedings.

Puerto Rico has been in a painful recession since 2006, and previous governments dug it deeper into debt by borrowing to pay operating expenses, year after year.

Puerto Rico’s case will be the first ever heard under a federal law for insolvent territories, called P romesa, which was enacted last summer; the Obama administration had warned that a “humanitarian crisis” would ensue if Puerto Rico were not given extraordinary powers to abrogate debt. There is no existing body of court precedent for Promesa, but the island’s creditors — who range from hedge fund managers to mom-and-pop investors — are bracing for a titanic battle.

Despite the depth of the island’s troubles, many Republicans in Congress have opposed debt relief, saying that the island has long received big federal subsidies for its health system, public housing and other works. They said Puerto Rico should explain what it had done with that money before it got any more help.

President Trump suddenly added fuel to those fires, saying on Twitter that there should be no “bailout” for Puerto Rico.

On the island, Washington is not seen as a helper but as an unsympathetic colonial overlord. The step toward bankruptcy-like proceedings, under a federal judge, intensified complaints that Puerto Rico has lost all control of its own future.

But at the same time, some Puerto Ricans say quietly that if the court proceedings really do allow their government to cancel debt, their island may finally get the fresh start it needs.

The coming court proceedings will not be formally called a bankruptcy, since Puerto Rico remains legally barred from using Chapter 9, the bankruptcy route normally taken by insolvent local governments. Instead, Mr. Rosselló petitioned for relief under Title III of the Promesa law, which contains certain Chapter 9 bankruptcy provisions but also recognizes that, unlike the cities and counties that use Chapter 9, Puerto Rico is not part of any state and must in some ways be treated as a sovereign.

https://www.nytimes.com/2017/05/03/business/dealbook/puerto-rico-debt.html

Severance Fund Established for Toys R Us Workers

jpbrooke@gmail.com (John Brooke) — Tue, 11 Dec 2018 17:56:45 GMT

KKR and Bain Capital, the private equity firms that owned Toys R Us before the company declared bankruptcy earlier this year, said Tuesday that they have each pledged $10 million to create the TRU Financial Assistance Fund, which aims to distribute severance funds to former employees.

The move is unusual for the firms, as they are not required under bankruptcy law to do such a thing.

In a joint statement, KKR and Bain said the fund is being established in response to "an extraordinary set of circumstances" for both of the firms.

"The confluence of the disruption in retail, the push by the company's secured creditors to liquidate the company's U.S. operations, and the fact that we have never experienced something like this in the history of either firm led us to try and find a way to provide some financial relief for former employees," the firms said in a statement.

In order to be eligible for the payments, those who were left jobless as a result of the company's liquidation will have to meet certain criteria. The ex-employees will have to have worked at Toys R Us for at least a year, they can't have more than $110,000 or less than $5,000 in annual income, and they must have met the termination and employment guidelines in the Toys R Us plan.

https://www.cnbc.com/2018/11/20/bain-and-kkr-establish-a-severance-fund-for-toys-r-us-workers.html

Sears Chairman Lampert Makes $4.6 Billion Bid

jpbrooke@gmail.com (John Brooke) — Tue, 11 Dec 2018 17:51:58 GMT

Dec 6 (Reuters) - Sears Holdings Corp Chairman Eddie Lampert's ESL Investments Inc has made an offer valued at $4.6 billion to buy the bankrupt U.S. retailer, one of the only options that would prevent the department store chain from shutting its doors for good.

Lampert's offer calls for about 500 Sears stores to remain open and would keep 50,000 of the retailer's workers employed, according to a letter from his hedge fund filed with the Securities and Exchange Commission on Thursday.

The 125-year-old company faces a series of deadlines this month to find a buyer that would keep it in business as some of its creditors call for it to shut down, claiming they would be repaid more through going-out-of-business sales.

Preliminary indications of interest for Sears assets were due Wednesday, according to court papers.

Many retailers that have filed for bankruptcy in recent years, including toy seller Toys R Us Inc and department store Bon-Ton Stores Inc, have liquidated after no viable offers to keep the companies open were made.

ESL's takeover bid features financing from a variety of sources and a complicated structure not uncommon in bankruptcy auctions. For starters, the hedge fund proposes to raise up to $1.7 billion in cash through a series of maneuvers that include Sears seeking a new loan backed by collateral and issuing new notes.

The hedge fund, the retailer's largest shareholder and creditor, would also forgive $1.8 billion Sears owes it in exchange for the company's assets, a bankruptcy maneuver known as credit bidding. Finally, ESL would assume $1.1 billion in existing Sears liabilities, such as gift cards the department-store chain issued.

Lampert's hedge fund has been working on a bid for Sears since the company filed for bankruptcy in October. The hedge fund manager was the chief executive of Sears until it filed for bankruptcy.

In his bid, ESL also proposes to acquire Sears Auto Centers, appliance brand Kenmore, battery line DieHard and the retailers home services division, the largest U.S. appliance repair provider, the letter said.

The retailer is attracting interest from outsiders, and Sears' attorneys have said they will analyze bids to maximize value. Retailer Ace Hardware Corp and investment firm Centerbridge Partners LP were together eyeing an offer for Sears' home services division, Reuters reported this week.

Firms that specialize in going-out-of-business sales, so-called liquidators, were also expected to make preliminary offers to shut Sears down, according to sources familiar with the matter.

Sears clinched a $350 million loan from creditor Cyrus Capital Partners LP in November to help it stay in business through the holidays.

Sears Filed for Bankruptcy

jpbrooke@gmail.com (John Brooke) — Tue, 16 Oct 2018 15:50:45 GMT

The once dominant retail giant has filed for bankruptcy October 2018

Taken from New York (CNN Business)- Sears, the once-dominant retail chain that changed how Americans shopped and lived, has filed for bankruptcy.

The 132-year-old company has been struggling for several years and is drowning in debt. The final straw was a $134 million debt payment due Monday that it could not afford. Sears Holdings, the parent company of Sears and Kmart, is among dozens of prominent retailers to declare bankruptcy in the era of Amazon. The filing in federal bankruptcy court in New York came in the early hours of Monday morning. The company issued a statement saying it intends to stay in business, keeping open stores that are profitable, along with the Sears and Kmart websites.

As of the filing, about 700 stores remained open and the company employed 68,000 workers. That's down from 1,000 stores with 89,000 employees that it had as recently as February. But Sears said that it's looking for a buyer for a large number of its remaining stores, and it will close at least 142 stores near the end of this year. That's in addition to the 46 store closings already planned for next month. The company did not rule out additional store closings as the bankruptcy process proceeds.

Eddie Lampert, the company's chairman and largest shareholder, gave up the title of CEO. The company will now be run by three of the company's top executives. For years, Lampert has claimed the company was making progress to end its years of ongoing losses. "While we have made progress, the plan has yet to deliver the results we have desired," Lampert said in a statement Monday. He said the bankruptcy process would allow the company to shed debt and costs and "become a profitable and more competitive retailer."

Although retailers typically file for bankruptcy with the intention of staying in business, many end up going bust after filing. In recent years, Toys "R" Us, RadioShack and Sports Authority have followed that path to the graveyard. The upcoming holiday season will be a particular challenge for Sears. It will need to do better than last year. While other traditional retailers enjoyed strong holiday sales, Sears and Kmart both reported sharp drops.

Sears fell out of shoppers' favor over the past decades as online stores and big box rivals, including Walmart and Home Depot, beat Sears on price and convenience. But many of Sears' problems were self-inflicted. Its management tried to compete by closing stores and cutting costs. It slashed spending on advertising and it failed to invest in the upkeep and modernization of its outlets. Sears and Kmart stores grew barren and rundown. Sales declined. Losses piled up in the billions of dollars. Debt mounted, and the company's cash reserves disappeared. Sears sold many of its most valuable assets, including its massive real estate footprint, to raise the cash it needed to survive. According to the bankruptcy filing, the company was losing about $125,000 a month.

It ditched Lands End in 2014. Three years later, Sears dumped the Craftsman brand, which it had sold exclusively. The company has been looking for a buyer for its Kenmore brand of appliances for years. The only acquirer it could find was Lampert, who offered $400 million for Kenmore through his hedge fund. The Sears board never accepted the offer.

By last month, Sears' market value had fallen below $100 million, less than quarter of the value of Kenmore itself. The retailer's problems have mounted in recent years. Sears warned investors last year there was "substantial doubt" it would be able to stay in business. It has lost $11.7 billion since 2010, its last profitable year. Sales have plunged 60% since then. The company shuttered more than 2,800 stores over the past 13 years.

With the writing on the wall that a bankruptcy was imminent, suppliers demanded Sears pay cash up front for the items in its stores, putting it at an even greater competitive disadvantage with other retailers.

What is the Bankruptcy Process?

Wed, 10 Oct 2018 05:19:22 GMT

Posted 21 Sep, 2016

The first step in the process of filing for bankruptcy is consulting with an experienced, knowledgeable attorney who can meet with you and take the time to discuss all of your available options. I understand that people hit rough patches in their lives and sometimes a bankruptcy is the only option to get back on track. Once you fall behind on your debt it is almost impossible to catch up. When the credit card companies raise your interest rate it is almost impossible to pay back your debt within a reasonable amount of time.

At the initial consultation I will provide you with a questionnaire to fill out that I would need to prepare your case. I will also provide you with a checklist of documents that I would require in order to file. Once you have everything in order and are ready to move forward you can give me a call and we will make time for you to come in at your earliest convenience. I will then prepare your petition within a short period of time which in most cases is only a day or two. You will then have to come back to my office to review and sign the paperwork. After signing, I will have your case filed usually the same day. As you can see, the process moves quickly and orderly.

Approximately one month after your case is filed you will have to attend a court conference called the Meeting of Creditors. Even though it is called the Meeting of Creditors in the vast majority of cases no creditors will ever appear. At this court appearance the trustee assigned to the case will ask you questions for just a few minutes. I will be sitting next to you the whole time to answer any legal questions that may arise.

In a chapter 7 usually there is only one court appearance and in the vast majority of bankruptcies the case will be closed. In a chapter 13 there is an extra step involved which is a confirmation hearing. At the confirmation hearing the trustee should confirm your case based upon the repayment plan submitted. The debtor does not appear at the confirmation hearing and only the attorney needs to attend.

In most chapter 7 bankruptcy cases approximately two months after you go to court your case will be closed and your debt will be forever discharged, meaning your creditors can never attempt to collect the debt again.

The Benefits of Bankruptcy

Wed, 10 Oct 2018 05:12:23 GMT

Posted 21 Sep, 2016

A major benefit to filing a petition in bankruptcy is the automatic stay that prevents most collection actions by creditors against the debtor or the debtor's property. As long as the stay is in effect creditors may not initiate or continue lawsuits, garnish your wages, call you, harass you or attempt to collect the debt in any way. It allows you a fresh start to your financial life and allows you to start over with a clean slate.

Of course, even when the collection agencies are pounding at your door and you can't pay your mortgage, electricity, cable, and credit card bills all in the same month, bankruptcy may still be your last option. At the initial consultation we will go over all possible options and devise the best strategy for you to take. For most people, if you are considering bankruptcy the chances are good there are no more options available.

One major benefit to filing bankruptcy is that in most cases you will be able to keep your home and car, even in a chapter 7 bankruptcy. With changes in the bankruptcy law in January of 2011 debtors are now allowed to have more than $330,000 equity in their home or more than $12,000 in personal property, including cash. If you have no equity in your home or you do not own a home you can elect to take the federal exemptions which for most people protects all of their assets.

No one even has to know that you filed for bankruptcy. Your friends, family and co-workers don't ever have to know you filed. Bankruptcy is a matter of public record but unless someone specifically inquires into whether you filed for bankruptcy it would never come up.

Bankruptcy also prevents your utilities from being cut off and your car from being repossessed. It will stop a foreclosure and pending sale date and will buy you time to work with your creditors and stay in your home as long as possible. While bankruptcy will allow for the discharge of a number of debts others remain non-dischargeable according to federal law. Non-dischargeable debts include family support, matrimonial judgments, student loans, certain types of taxes, restitution and criminal fines.

Additionally, it is important to remember that chapter 7 bankruptcy does not relieve a co-signer from any responsibility to pay back debt. The creditor has the right to enforce the co-signer's obligation. Chapter 13 on the other hand will protect a co-signer as long as the debtor complies with the bankruptcy plan.

Is Bankruptcy Right for Me?

Wed, 10 Oct 2018 05:05:54 GMT

Posted 21 Sep, 2016

Bankruptcy can serve as a Fresh Start and set you up for a successful financial future. Debt worries are a terrible burden to carry. Wouldn’t you like to have:

No more sleepless nights
No more threat of lawsuits and wage garnishment.
No more fear of answering your phone.
No more fear of losing your home, car and other assets.
No more feeling helpless because your creditors won’t work with you.
No more calls from bill collectors.

Most people with severe debt problems are eligible for bankruptcy relief. But anyone that has debt issues should consult with a bankruptcy attorney who can advise you if bankruptcy is an option for you and how it will affect your assets.

There are several different kinds of bankruptcy cases. We refer to these different types of cases as “Bankruptcy Chapters.” The actual bankruptcy law is officially called Title 11, United States Code. It is divided up into a number of different “Chapters” that offer different types of relief.

Each of the bankruptcy chapters is designed for a different purpose. Chapter 7, often called straight bankruptcy, is intended to relieve you from the burden of most ordinary debts, such as credit cards and other unsecured debts. Chapter 13 and Chapter 11 are reorganization cases. They allow the restructuring of certain types of debts and then let you pay them under new terms while giving you and your property court protection from creditors.

An experienced bankruptcy attorney can guide you towards the remedy that will work the best for your situation. The whole point of bankruptcy is to give you a Fresh Start. Misfortune and financial mistakes can strike anyone. Why spend the rest of your life paying for yesterday’s mistakes, if you don’t have to? Let us show you a better way, if there is one.

Life After Bankruptcy

Wed, 10 Oct 2018 05:01:54 GMT

Posted 21 Sep, 2016

You have a fresh start, and some new challenges. Your credit rating, which probably wasn't all that great already, will be impacted by filing for bankruptcy. Filing for bankruptcy will have a short term negative impact on your credit rating, but not filing for bankruptcy may be worse. Not filing for bankruptcy and continuing to incur late fees, legal charges and judgments will continue to bring down your credit until you do something about it.

You really need to ask yourself several key questions including, 'how did I get here? What could I have done differently and what should I do differently in the future? And what have I learned from all of this? Your answers will help you create a better financial afterlife in the wake of a bankruptcy.

Many of my clients tell me that they were able to obtain a new car loan immediately after filing a chapter 7 bankruptcy, even while it is still on their credit report. FHA guidelines also allow you to get a mortgage two (2) years after filing a ch. 7 bankruptcy. You will also get solicited for new credit cards almost immediately because you can only file for a chapter 7 once every eight (8) years. The creditors know you have to pay back your debt to them so they will make credit easy to obtain, although at slightly higher interest rates. Generally, you do not want to incur more credit card debt, however you may want to get one credit card for emergencies or for contingencies such as booking plane tickets or car rentals. Remember, the whole point of filing for bankruptcy in the first place was to rid yourself of debt and get a fresh start, not to get into debt all over again.

After your bankruptcy has been discharged, you need to re-establish your good credit. You need to do so right away for a chapter 7 or after reorganization for a Chapter 13. Obviously, continuing to pay your other bills on time such as your mortgage and utilities will help to build up your credit. You may also want to get either a secured or unsecured credit card and pay it off every month. There are reputable companies available who will help you to build your credit back up. This can be explained more during your free initial consultation.

You are only able to receive a discharge in a chapter 7 bankruptcy after eight (8) years have passed since the commencement of the last case in which you received a discharge. You generally can file another chapter 13 case sooner (usually 4 years) if the need arises. Thus, you should not file a bankruptcy if you need the option of doing it again in the next few years. The case may arise if the reason you are filing bankruptcy is to discharge medical bills and you may have to incur additional medical bills in the future.

Common Bankruptcy Questions

Wed, 10 Oct 2018 04:57:43 GMT

Posted 21 Sep, 2016

Questions About Bankruptcy?

1.) What is the difference between a chapter 7 and chapter 13 bankruptcy?

A chapter 7 is a "liquidation" bankruptcy that discharges your debts and you do not pay any of them back. Not all debts are dischargeable though such as some tax debts, criminal fines and most student loans. A chapter 13, on the other hand, is a wage earner's bankruptcy where you pay back anywhere from a fraction of what you owe up to the full amount. Debtors may file a chapter 13, as opposed to a chapter 7, for various reasons such as not passing the means test or they are trying to save their home and repay mortgage arrears.

2.) How long does a chapter 7 bankruptcy take before I receive a discharge?

Generally, once a ch. 7 is filed you will have one court appearance where you meet with the bankruptcy trustee assigned to your case. This is called the 341 Meeting of Creditors. Although it is referred to as the Meeting of Creditors, in most ch. 7 bankruptcy cases the creditors will not appear. The court appearance is usually only a few minutes long and in the vast majority of cases your 341 meeting will be closed by the trustee. Sixty (60) days after this your bankruptcy case should be closed and you will then receive a discharge of your debts. The discharge means you no longer owe the debts listed in your bankruptcy.

3.) Do I have to stand before a judge in a courtroom?

Nope, you will meet with the trustee assigned to your case at the court appearance where he will ask you questions for a few minutes. You will be prepared for the types of questions beforehand and you will feel comfortable by the time your court date arrives.

4.) I thought chapter 7 bankruptcy stopped the foreclosure? Can the bank still take my house?

When you file Bankruptcy, you receive an "automatic stay" on court actions such as foreclosures and sheriff's sales. A creditor can still go into court and ask the bankruptcy judge for a "relief from stay", and if granted the creditor can proceed with a court action to foreclose.

5.) Can I keep some of my debts out of my bankruptcy?

Nope, you must list all of your debts as well as assets in your bankruptcy petition. Debtors are not allowed to pick and choose whom they want to pay back. You may still voluntarily pay back a creditor, such as a family member, car loan or mortgage once your bankruptcy is discharged although you are under no legal obligation to do so.

6.) Can I change my Chapter 7 to a Chapter 13 and vice versa?

Yes, in most cases you are permitted using a "motion to convert." In certain instances you may want to do so if you can no longer afford your chapter 13 plan payments. You may want to convert to a chapter 7 to discharge the debt. A trustee may also make the motion to convert if he feels you have money to pay back some of your debts in a chapter 13. This may happen in rare instances such as if a debtor fails to disclose all of his or her income in the bankruptcy.

7.) Do my spouse and I have to file jointly?

Nope, the decision to file individually or jointly depends on your situation. For instance . . .

If only one spouse owes all or most of the debt then only that spouse should file.
If both spouses owe the debt and want to file a chapter 7 then both can file.
If you're trying to stop a foreclosure then only one spouse who is on the title to the home needs file a Chapter 13.

8.) Are my family, friends and co-workers going to find out that I filed for bankruptcy?

It is a matter of public record that you filed for bankruptcy but in most cases only your creditors are notified that you filed. No one else will know unless you tell them or they do a search in the public court records.

9.) What does it mean to reaffirm a debt such as a car loan?

This means you would become personally liable for the debt again. Sometimes you may reaffirm a debt such as a car loan. The bank may require it or they can repossess your car, even if you are current with the payments. Bankruptcy may be considered a default under your loan terms and some financing companies may repossess the vehicle. I will explain during your free initial consultation whether or not I think it is a good idea to reaffirm depending on your particular case.

How Much Does It Cost to File Bankruptcy?

Wed, 10 Oct 2018 04:51:50 GMT

Posted 21 Sep, 2016

What is the cost for filing Bankruptcy with a lawyer? We can give you a price range for Chapter 7. The cost for filing Bankruptcy cases in will typically run somewhere between $1000 and $2000 for the lawyer fee for Chapter 7. (Chapter 13 fees depend on so many factors that there is no point trying to figure out the fee without seeing you in person for a consultation.) The court filing fee will be another $335, and court credit counseling should run about $15. But the exact cost for filing bankruptcy depends entirely on the facts your case. There is only one good way for you to find out. You need to see a bankruptcy lawyer for a personal consultation. Unless you do that, you are just fishing around and wasting your time.

Bankruptcy Court Filing Fees Explained.

The amount of court filing fees might be confusing. Many people thing a filing fee is an extra fee that goes to your lawyer. It isn’t. Filing fees are money collected by the court. The money for filing fees is used to pay the operating costs of the court. The filing fee for Chapter 7 bankruptcy is $335. The filing fee for Chapter 13 bankruptcy is $310. Normally, these fees are paid at the time you file your papers.

Why don’t lawyers charge everyone the same bankruptcy fee? We could do that. But it will be a bad deal for you. Most people would wind up paying more than they have to. Here’s why. The price for everything in life always depends on how much it costs to make it. The time and effort to do your neighbor’s bankruptcy case might be a lot more than it takes to do yours. That’s why your neighbor’s case will cost more. Your case is more simple. Should you pay as much as we charged your neighbor? Those differences directly affect the cost to file bankruptcy.

2. But some lawyers advertise a flat fee for everybody, don’t they? Yep. We see those ads just like you do. And we don’t believe them. We represent many clients who came over to us after they already went to those places. “Bait and switch” advertising has been around for a long time. (Think mortgage brokers, car dealers, jewelry stores, appliances stores, mattress stores, etc.) That’s because a new sucker is born every minute. And, bait and switch ads work on suckers. Going to a lawyer who plays “switcheroo” games on your fee is just asking for trouble later on.

We offer a completely free bankruptcy consultation. How much does it cost to file bankruptcy? Come see us and find out. You will meet with a bankruptcy expert having years of experience. You will get all your questions answered. We will explain how everything works. We will tell you if we see any troublesome problems. We will not recommend bankruptcy unless you need it. We will offer you a flat fee for any work we recommend, and we will put our fee in writing. Our fees are reasonable. Also, we consider ability to pay. We will reduce our fees for anyone with an extreme hardship.

3. An adequate bankruptcy evaluation will normally take anywhere from 30 to 60 minutes of office time. Without spending the time, a lawyer might not have enough information to tell you how much it will cost to file bankruptcy. Here are examples of some things a bankruptcy lawyer should know before quoting you the fee.

Which kind of bankruptcy are you going to file
Have you been in business
Who are your creditors
What are your assets
What is your income
What are your basic living expenses
Is there an emergency, like a foreclosure sale or wage garnishment?
You may have documents which the lawyer needs to review, such as lawsuit papers, deeds, and foreclosure notices

“How do I pay you?” Once you know the cost to file bankruptcy, paying it is the #1 problem most clients have. I wish I had a dollar for every time someone asked, “How do I pay you?” Some people who need bankruptcy will never be able to pay a lawyer. However, most people will be able to afford a lawyer if they come to us. Without an experienced lawyer , you are running some big risks. Some of the problems we see in such cases are very serious where people file without a lawyer:

lost assets that might have been protected;
failed to discharge taxes that might have been dischargeable;
had their bankruptcy denied;
filed under the wrong chapter;
lost their home because the lawyer gave the wrong instructions.

What can be done to make it easier to pay the cost for filing Bankruptcy?

There are ways that make it easier to pay the cost to file bankruptcy. There are things that lawyers can do. And there are also some things that clients can do.

At my law firm, we struggle to stay affordable. There are several ways we do this. For one thing, we don’t waste client money paying for fancy offices. We don’t have oriental rugs on the floor. We don’t have fancy furniture. We keep our offices simple and functional. The biggest cost advantage that our clients benefit from is our experience . We can do most things in a fraction of the time it takes a less experienced lawyer. The cost savings is passed on to you.

Bankruptcy vs. Debt Consolidation

Wed, 10 Oct 2018 04:41:53 GMT

Posted 21 Sep, 2016

Should You Try Debt Consolidation?

If you are struggling with debt and looking for a way out, it is wise to explore your options. You have probably seen or heard advertisements for debt consolidation services that promise to work with your creditors to consolidate your debt and significantly lower your monthly payments. We urge you to use caution before contacting one of these services. Like most promises that sound too good to be true, they often are. At The Brooke Law Firm we will help you explore all of the debt relief options available to you. We are a bankruptcy firm, but we do not push our clients into bankruptcy if we do not think it is the best option for them. We are committed to helping our clients resolve their debt problems, achieving true debt relief and avoiding potential debt consolidation scams.Call (631) 397-0042 or contact us online for a free consultation with a Long Island bankruptcy lawyer. It could be your first step on the road to debt relief.

Is Debt Consolidation Right for You?

If you hire a debt consolidation service, the best case scenario is that they will act in good faith and attempt to work with your creditors to consolidate your debt and negotiate lower payments. The question is: How are they going to get your creditors to go along with the plan?

In many cases, debt consolidation services have no leverage and no means of providing lenders with incentive to agree to a debt consolidation. If, after months of waiting, the company is not able to help you, you will be left with all of the debt plus months of interest and/or late fees. Plus, you probably paid good money to the debt consolidation service. More often than not, the fees are more excessive for less relief than a discharge in a bankruptcy.

The above scenario is based on the assumption the consolidation service is acting in good faith. Since these companies are largely unregulated, consumers are putting themselves at risk by handing money over to them. A bankruptcy law firm is backed by the power of the federal bankruptcy code. When you file for bankruptcy, you do not have to get your creditors to agree to the plan. It is enforced by the bankruptcy court.

Bankruptcy is not right for everyone, but those who it can help are usually at a disservice by hiring a debt consolidation service.

What the Credit Industry Doesn't Want You to Know

Wed, 10 Oct 2018 04:18:44 GMT

Posted 21 Sep, 2016

Long Island Bankruptcy Lawyers Giving You the Facts

The credit industry wants to discourage debtors from filing for bankruptcy protection. In an effort to collect on debts, creditors can be aggressive and frequently try to frighten hardworking people. At The Brooke Law Firm, we want to make sure those in financial distress understand the truth about filing bankruptcy.

From our office in Brightwaters (next to Bay Shore in Suffolk County), our firm has helped thousands of clients get the debt relief they need through Chapter 7 and Chapter 13 bankruptcy. During a free initial consultation, will meet with you and answer all your questions about bankruptcy and how it can affect your life. Do not let the credit industry scare you. Get the facts.

Did You Know?

Here is some information you may not know about bankruptcy :

Recent bankruptcy laws are not as restrictive as you might think — While it is true that these laws created more steps and paperwork for bankruptcy filings, these changes will most likely affect your bankruptcy attorney more than they affect you.
A majority of individuals who file for bankruptcy do not lose any of their belongings — Creditors would like you to believe that if you file bankruptcy, you will lose your house, your car and all your personal belongings. The truth is that a majority of petitioners retain all their property.
After you file bankruptcy, creditor harassment must stop — Once you file, an automatic stay goes into effect, prohibiting creditors from contacting you.
You have the power to stop a home foreclosure — Filing bankruptcy halts all foreclosure actions, giving you room to breathe.
You can rebuild your credit — Once your debt is discharged, you will be able to work on repairing your credit score. Many people get approved for a secured credit card or loan within a year after filing bankruptcy. You may even have the ability to avoid high interest rates.
Many people filing bankruptcy are good people who have fallen on hard times — The credit industry would like you to believe that only deadbeats file bankruptcy. However, a large number of petitioners got into financial trouble because of job loss, divorce or unforeseen medical expenses.
Bankruptcy offers the best solution to obtain a fresh start after suffering from a financial hardship — Bankruptcy is usually a one-time, one-fee proposition. Your fresh start begins immediately after filing.

Reaffirming Debts

Wed, 10 Oct 2018 04:09:57 GMT

Posted 21 Sep, 2016

If you are behind on car or mortgage payments, which are classified as secured debt, and you want to keep the property after filing a Chapter 7 bankruptcy, you may be thinking about a reaffirmation agreement. By reaffirming the debt you owe, you are able to keep your vehicle or personal property recently purchased, provided you are able to make the payments.

However, reaffirmation agreements can be complex. To get all the information you need to make a sound decision, speak to us at The Brooke Law Firm. Our firm has helped thousands of individuals throughout Long Island achieve debt solutions that work for them. Meet with us to discuss your situation during a free consultation.

How Does a Reaffirmation Agreement Work?

Since home mortgages and car loans are considered secured debt, if you have defaulted on your payments, the lender can take the property from you. With a vehicle, it is referred to as repossession . With a home, it is a foreclosure action.

By reaffirming the debt, you are essentially promising the lender that the debt will not be discharged in bankruptcy. It involves entering into a new contract with the creditor for the remaining amount due. There are certain benefits to reaffirming a debt such as being reported on your credit report as being paid which will help you rebuild your credit.

Should I Sign a Reaffirmation Agreement?

If you wish to keep your vehicle you may need to sign a reaffirmation agreement. However, it is important that you understand that entering into that contract will make you personally liable for that debt, despite your bankruptcy relief. Therefore, it is critical that you can afford the payments established in the new creditor payment plan. The payments and interest rate stay the same, and are sometimes even lowered, and you are guaranteed the lender won't take the property as long as you are current with payments.

When the Financial Stakes Are High, Get Professional Advice

Reaffirmation agreements only apply if you file a Chapter 7 bankruptcy, not a Chapter 13 bankruptcy. To determine if you are eligible for Chapter 7 bankruptcy, you must pass the means test. We will meet with you in a free consultation to answer all your bankruptcy questions.

Bankruptcy and Student Loans

Wed, 10 Oct 2018 04:05:33 GMT

Posted 21 Sep, 2016

After working hard to improve your education, it can be frustrating to deal with massive student loan debt. Recent graduates often struggle to make ends meet, let alone pay down their loans. If your student loan debt is causing unmanageable financial hardship, it is time to talk with a bankruptcy attorney.

Generally, student loans are not dischargeable in bankruptcy. However, by filing either Chapter 7 or Chapter 13 bankruptcy, you can free up funds, making it easier to pay your student loans. At The Brooke Law Firm, we know the bankruptcy laws from the inside out and will explore every option available to get the relief you need.

Helping You Obtain an Increased Cash Flow

While you will most likely not be able to eliminate your student loan debt, there are ways to get the debt under control. By filing Chapter 7 bankruptcy, we can help you discharge your unsecured debts, such as credit card bills and medical expenses . Because you will no longer need to pay those debts, money is freed up to focus on your student loan.

By filing Chapter 13 bankruptcy, it is possible to reduce the amount of your monthly payment to something more workable without the threat of penalty. Your student loan could also be deferred for a period of time. To learn more about your options, call our office in Brightwaters (next to Bay Shore in Suffolk County) at (631) 397-0042 to arrange a free initial consultation.

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